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Spinners prefer buying fine lint amid firm spot rate
Feb '11
Fine lint continued to draw the attention of spinners in the middle of firm spot rate and strong physical prices in the cotton market.

The Karachi Cotton Association (KCA) spot rate has remained stagnant at Rs 11,500 per maund whereas the physical prices of cotton lint stood at about Rs 13,500 per maund in the midst of soaring demand for fine lint.

In Punjab stations, the spinning mills purchased lint of all grades at competitive prices hovering around Rs 13,600 per maund whereas in lower Sindh stations, ginners who have held back fine lint, have raised their asking rates above Rs 13,500 per maund.

Most of the cotton traders in Punjab stations continued to remain optimistic about the rise in lint prices in the upcoming trading sessions. The ginning activity in the upper Sindh region has almost come to a standstill as cottonseeds are no longer arriving and only 5 percent of the ginners are engaged in ginning the cottonseeds from the existing stocks.

Major spinning mills from the Sindh region have entered into contracts with ginning units in Punjab in order to get delivery of cotton lint every month with surplus transportation charges.

This is likely to raise the production cost of yarn and fabric manufacturers but owing to the higher requirements of yarn, the producers are somehow managing to reap marginal profits in order to keep their units running. The local banks are also hesitant in raising the credit limits due to the stagnant spot rate, which is further causing scarcity of money to the buyers as well as ginners.

Mills-to-mills trading of cotton lint also took place in Punjab as several medium and small sized factories purchased lint to fulfill their demand.

Most of the cotton trading took place at the price range of Rs 11,550 per maund and Rs 13,000 per maund on the basis of the grade that had been traded.

Trading in the upper Sindh region took place at Rs 13,000 per maund whereas in Punjab, the spinning as well as the textile units continued to remain the volume leaders as they traded 24,600 bales which accounts for 85 percent of the total lint that had been traded.

The commercial exporters from the private sector bought fine lint but only in small amounts owing to its scarcity. The New York Futures is reflecting a higher trend and has also increased the prices of cotton in the global market.

The New York Futures Market March contracts 2011 remained at 186.05 cents per pound and May stood at 183.05 cents per pound whereas Cotlook A Index stayed at a much higher level at 217.30 cents per pound.

Fibre2fashion News Desk - India

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