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KARACHI, Dec 24: Textile exports in the five months financial year (5MFY13) stood at $5.4 billion with strong contribution from yarn.
Latest data by Pakistan Bureau of Statistics showed that textile exports for the month of November 2012 amounted to $1.01bn, representing 10 per cent decline over the earlier month. The fall did not, however, act as a material drag on financial-to-date numbers, as exports for 5MFY13 were still up by a decent 8 per cent to $5.4bn over same time last year.
However, exports grew by a sizeable 23pc for Nov 2012, over the exports of $0.82bn in Nov 2011, which happened to be the lowest monthly figure for FY12.
The brokerage KASB Securities stated that among the weak links in month of Nov 2012 was the value added chain (knitwear, bedwear, garments) which saw volumes and dollar values erode. Exception was cotton yarn which maintained its stellar performance, increasing 13 per cent over the earlier months and taking a leap of 42 per cent over the same month the previous year.
The strong demand of cotton yarn in the Far East (mainly China) provided the impetus. Looking at product categories, although realized prices have been hovering in a tight band in dollar terms (in line with cotton price movement), volumes have been fairly erratic.
The analysts expect the future sector earnings/profitability to be more a volume driven function which would bring into highlight another variable into the equation energy. The analysts noted that the entire textile sector had benefited from improved operating backdrop, including FYTD 250bps cut in discount rate; rupee depreciation by three per cent and stable cotton prices.
However, a test of resilience of companies would depend on how effectively manufacturers cope with energy outages in the next two to three months. The choices were thought to be either to switch over to FO/HSD for power generation at the cost of margins, or to shut down production shifts and curtail capacities.
In regard to winter gas schedule for textile industries in Punjab, Petroleum Minister had announced a six hour daily gas supply to Punjab industries. Such stop gap arrangement was thought to be the norm during the winter months.
Analysts said they visualised temporarily disruption in textile export numbers for Dec-Jan following 10-12 days transporters strike in Karachi that led to order delays and/or cancellations. Beyond that hiccup and the menace of gas curtailment, the textile sector dynamics were said to appear fairly robust.
However, cotton price fluctuation remained a swing factor with a greater potential to impact realised prices rather than volumes. Although incremental crop arrivals have slowed by 2.4pc to 10.7m bales over the same time last year, which in turn has modestly lifted local cotton prices by 3 per cent, analysts still expect full year crop to exceed estimates.
Latest data by Pakistan Bureau of Statistics showed that textile exports for the month of November 2012 amounted to $1.01bn, representing 10 per cent decline over the earlier month. The fall did not, however, act as a material drag on financial-to-date numbers, as exports for 5MFY13 were still up by a decent 8 per cent to $5.4bn over same time last year.
However, exports grew by a sizeable 23pc for Nov 2012, over the exports of $0.82bn in Nov 2011, which happened to be the lowest monthly figure for FY12.
The brokerage KASB Securities stated that among the weak links in month of Nov 2012 was the value added chain (knitwear, bedwear, garments) which saw volumes and dollar values erode. Exception was cotton yarn which maintained its stellar performance, increasing 13 per cent over the earlier months and taking a leap of 42 per cent over the same month the previous year.
The strong demand of cotton yarn in the Far East (mainly China) provided the impetus. Looking at product categories, although realized prices have been hovering in a tight band in dollar terms (in line with cotton price movement), volumes have been fairly erratic.
The analysts expect the future sector earnings/profitability to be more a volume driven function which would bring into highlight another variable into the equation energy. The analysts noted that the entire textile sector had benefited from improved operating backdrop, including FYTD 250bps cut in discount rate; rupee depreciation by three per cent and stable cotton prices.
However, a test of resilience of companies would depend on how effectively manufacturers cope with energy outages in the next two to three months. The choices were thought to be either to switch over to FO/HSD for power generation at the cost of margins, or to shut down production shifts and curtail capacities.
In regard to winter gas schedule for textile industries in Punjab, Petroleum Minister had announced a six hour daily gas supply to Punjab industries. Such stop gap arrangement was thought to be the norm during the winter months.
Analysts said they visualised temporarily disruption in textile export numbers for Dec-Jan following 10-12 days transporters strike in Karachi that led to order delays and/or cancellations. Beyond that hiccup and the menace of gas curtailment, the textile sector dynamics were said to appear fairly robust.
However, cotton price fluctuation remained a swing factor with a greater potential to impact realised prices rather than volumes. Although incremental crop arrivals have slowed by 2.4pc to 10.7m bales over the same time last year, which in turn has modestly lifted local cotton prices by 3 per cent, analysts still expect full year crop to exceed estimates.
