India cancels export orders for 200,000 bales.

KARACHI: Pakistan cotton importers are considering to go for arbitration service of International Cotton Association (ICA) on cancellation of 200,000 cotton bales orders by Indian exporters.

“Indian exporters cancelled the orders by Pakistani importers without giving any valid reason, causing a huge financial loss to the importers,” Karachi Cotton Association (KCA) member Shakeel Ahmad said Tuesday.

The refusal of 200,000 bales export from India is sheer violation of bylaws and rules of ICA, Liverpool as this is an event of a contract dispute at international level, Ahmad added.

Indian traders had assured their Pakistani counterparts that they would honour the commitment by April 18, 2010, but later on they broke their promise, he said.
He said at the behest of Gujrat exporters, the Indian government had imposed an export duty on the produce besides they raised export price to Rs 6,200 per 100 kilogrammes in Pakistani rupee.

He said Pakistan’s textile sector would have to bear a burden of around $900 million for import of cotton to fulfil its immediate requirements of the produce from other sources.
Indian cotton prices increased around 27 percent and cancellation of Pakistani orders on ground of difference in import price caused increase in domestic lint prices, he added.
“Indian traders have a habit of increasing their rates in line with the fluctuation in international prices even after an agreement is signed for shipment of the consignment,” he maintained.

Pakistan has so far imported around one million cotton bales from India at an average import price of Rs 5,800 per 100 kilogrammes while remaining orders for 200,000 bales were cancelled, Ahmad said.

The clash of short-term negative supply fundamentals and the outlook for lower production and a sharp drop in stocks for the 2009-10 outgoing season also gave impetus to volatile cotton prices in the country.

“This also tranlated the crisis of yarn export and war started between exporters and downstrean textile industry in the country,” he said.
We want an impartial and internationally recognised arbitration service that upholds the sanctity of pakistani contracts in order to promote good trading practice,” Ahmad asserted.
The ICA is the world’s leading international cotton trade association and arbitral body. ICA arbitration proceedings can be enforced in foreign courts under international law, following an agreement made in New York on June 10, 1958 on the recognition and enforcement of foreign arbitral laws.

Internationally recognised in the cotton community, the ICA protects the legitimate interests of all those who trade cotton, whether buyer or seller.
“We believe in good practices so we are going to ICA because promoting a universal understanding is our principle stand, he added.

Ahmad said Pakistan produced around 12.69 million bales during the outgoing crop season 2009-10, while the textile sector’s total requirement is 15 million cotton bales.
He said, “Lint stocks in the country stand around 25,000 bales while there is a wide gap of around 3 million cotton bales in the country against the requirements.” In the international market the lint prices are hovering around 80-81 cents per pound.

Source : dailytimes.com