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Textile exports continue record streak in Oct’21

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November 16, 2021 (MLN): Pakistan’s textile exports continued their record-breaking streak during Oct’21, depicting an upsurge of 24% YoY and 7.65% MoM. This takes the total textile exports during the first four-month of the current fiscal year i.e., July-October FY22 to $6.02bn, up by 26.55% YoY, showed data released by the Pakistan Bureau of Statistics (PBS).

The notable year-on-year increase in the said exports is due to the global textile dynamics that favour Pakistan amid competitive pricing made possible by extended government incentives, a brewing trade war between US and China, and continued rerouting of orders from other competitive economies due to business disruptions.  

The vaccination rates in the West will further continue the present growth momentum, sustaining high-street retail sales, Abdul Ghani Mianoor, Analyst at Intermarket Securities (IMS) said.

During 4MFY22, the YoY rise in textile exports is a testament to the strong demand for Pakistan’s textiles in the global market, despite the resumption of economic activities in competing countries.

Segment-wise value and non-value-added exports posted a growth of 25% and 34%, YoY in 4MFY22.

In the value-added segment, Knitwear, Bed-wear, Readymade garments and Towels registered an upsurge of 35.45%, 21.30%, 22.34% and 14.17% to $1.60bn, $1.09bn, $1.16bn and $323mn during July-October FY22 compared to the corresponding period last year.  

Given recent currency depreciation, the demand for Pakistan's textiles globally is likely to remain strong on the back of continuous redirecting of orders out of China and other regional Asian countries. The local textile sector finds itself in a sweet spot.

However, the recent development of discontinuation of tariff subsidy given to the textile sector does pose some concern where if this occurs, it is expected the players in Sindh and KPK to be at the biggest disadvantage owing to their higher dependency on gas, while the players in Punjab, having a diversified energy mix, will likely be least affected, a research report by AKD highlighted.

On the import front, textile imports continued the sharp YoY rise in October 2021, reaching $386mn, led by the sharp rise in raw cotton imports by 79% YoY largely due to a rise in global cotton prices to an average Usc117.60 in October 2021 (up by c.60% YoY), while volumes rose a softer c.30% YoY.

Moving forward, it is expected that the cotton prices would remain robust owing to stronger demand expectation outpacing supply growth in the backdrop of 2.8mn and 2.3mn bales lower ending stock projected in China and India in FY22, respectively, it added.

On the local front, cotton prices currently hover around Rs17,233 per maund – at about the highest level since 2010. However, the recent arrival of 6.257mn cotton bales that surged by 81.2%YoY as of November 01, 2021, casts positive overtures on the cotton production outlook where the current production target is set at 8.5-9.5mn bales for FY22.

In this backdrop, it is projected that the local demand would likely settle at 13-14mn bales where the country may still need to import 3-4mn bales to meet the demand, Mohsin Ali, Investment Analyst at AKD said.

Furthermore, it is expected multiyear high cotton prices would provide further impetus for farmers to grow more cotton as opposed to other crops. Hence, the report rules out a sharp correction in cotton prices in the near term following strong demand from downstream textile players.

Copyright Mettis Link News

Copyright Mettis Link News

Posted on: 2021-11-16T21:15:24+05:00

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