Oil rises above $80,

Wednesday, 11 November 2009 09:57

LONDON: Oil prices rose on Tuesday to above $80 a barrel after a late-season hurricane disrupted oil and gas output in the Gulf of Mexico and the dollar stayed close to a 15-month low. US crude for December delivery was up 92 cents to $80.35 a barrel by 1525 GMT, after trading most of the session below yesterday s close of $79.43. London Brent crude was up $1.01 at $78.78. Hurricane Ida, the first real weather threat to oil production of the 2009 season, was downgraded to a tropical depression on Tuesday, but output remained curtailed as producers awaited its passage out of the Gulf. Ida shut in 29.6 per cent of oil production and 27.5 per cent of gas output from the Gulf of Mexico, the US Minerals Management Service said on Monday. Traders said other reasons for oil s gains were the dollar s ongoing weakness, which has also spurred gold to record highs above $1,100 an ounce. We ve held onto the hurricane gains, but the strength in gold above $1,100 and the weak dollar are the reasons we haven t come down more, said Christopher Bellew, a broker at Bache Commodities. The dollar rose on Tuesday from a 15-month low, but analysts said the trend of dollar weakness was still in place, potentially providing support for dollar-denominated commodities.

Looking to the long term, the International Energy Agency published its annual World Energy Outlook on Tuesday, forecasting a rise in primary energy demand globally by 1.5 per cent every year until 2030, and calling for $26 trillion in investment to meet the expected demand. Market reaction to the report was negligible because the annual report is a projection on the basis of a scenario, trying to look 20 years out, Harry Tchilinguirian, senior oil analyst at BNP Paribas, said. Long term it s an important guideline, but any reactions in oil short-term will be on dollar moves, equity markets and central bank decisions, he said. Market-wise, the big issue is how commodities are being targeted by investors looking for yield as a result of accommodative monetary policy, Tchilinguirian said. The latest snap shots on near-term fundamentals will come from US inventory data. Analysts predicted US crude oil inventories last week rose slightly because of higher imports, according to analysts polled by Reuters late on Monday. Industry group the American Petroleum Institute (API) will release weekly inventory data later on Tuesday, while a report from the US Energy Information Administration (EIA) will be delayed from Wednesday to Thursday due to a federal holiday on November 11. Oil prices have more than doubled from a low of less than $33 touched in December, although they are still barely half their high of more than $147 a barrel touched in July last year. The catalyst for this rally has been, in our view, long-anticipated signs of improvement in oil fundamentals in the context of generally constructive economic data, analysts at Goldman Sachs wrote in their Commodity Watch note to investors. Strong emerging market demand has pulled supply elsewhere, reducing US petroleum imports. Specifically, Chinese oil demand continues to surge, driven by strong economic activity.

Gold continues to climb, now at Rs34,755 a tola

Wednesday, 11 November 2009 09:57

KARACHI: Amid expectations that gold may jump further, the precious metal reached Rs34,755 a tola, taking a Rs255 leap in a day on Tuesday. The opening rate for the local market on Tuesday was Rs34,600 as compared to Rs34,500 on Saturday, which later rose to Rs34,755 by the time businesses shut here in the city. This is so far the highest level in the history of gold. This swift rise is said to have been caused by bulk buying of gold by Sri Lanka, besides India and China who have bought from the IMF, said Haji Haroon Chand, President of All Sindh Saaraf and Jewellers Association. A number of countries are diversifying their foreign exchange reserves and moving away from the weakening dollar to gold. In the local markets, the rate for 10 grams of gold jumped to Rs29,790 from Rs29,575, scoring a Rs215 rise in a day. In the international market, an ounce of gold was priced at $1,104, up from $1,095 in a day, which is expected to rise further, said Chand. However, as the rate of the precious metal goes up, local dealers see a further decline in business as the buying power keeps on falling day-by-day amid an economic downturn in the country. In London, gold prices rallied toward recent record highs above $1,110 an ounce on Tuesday, reversing earlier losses, as the dollar erased initial gains against a basket of six major currencies, adds Reuters.

Spot gold hit a session high of $1,109.20 an ounce and was at $1,106.90 at 1540 GMT, against $1,103.85 late in New York on Monday. The market earlier dipped as low as $1,096.60. The metal also found support from renewed investor interest after the International Monetary Fund announced last week it had sold 200 tons of gold to India s central bank, which prompted the metal to reach record highs. Given all the noises hedge funds have been making, plus all the noise surrounding further potential central bank buying, it is difficult to see much of a downside, said Societe Generale analyst David Wilson. US gold futures for December delivery on the COMEX division of the New York Mercantile Exchange firmed $5.90 to $1,107.30 an ounce. The precious metal hit an all-time high of $1,110.85 an ounce on Monday as the dollar index, which measures the US currency s performance against a basket of six others, hit its lowest since August 2008. Gold initially struggled to break new ground as the dollar edged up on Tuesday, but bounced back as the currency slipped back towards 15-month lows against a currency basket. Strength in the US unit dampens gold s appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies. The dollar remains susceptible to further losses, analysts said. My feeling is we will actually see the dollar break down further in the next few weeks, and that will help take gold up to new levels, said Standard Chartered analyst Daniel Smith. We think $1,200 is quite a realistic target before the end of the year.

Sugar crisis to create medicine shortage

Wednesday, 11 November 2009 09:57

KARACHI: Former chairman FPCCI Standing Committee on Pharmaceuticals, Dr Mushtaq Noorwala, while expressing concern over the continuing crisis of sugar in the country, has cautioned that the pharmaceutical industry and other industries using sugar as raw material will be severely affected.

If availability of sugar at a low price is not ensured for the pharmaceutical sector, there will be a shortage of medicine which will create serious problems, especially for the common man. Besides, a large number of people engaged with this industry will be rendered jobless, he said in a statement. Dr Noorwala regretted that despite the directives of the Supreme Court of Pakistan and the government s stance about availability of huge stocks of sugar, the commodity is sold at an unbearably high price and is not easily available to the public. He suggested that sugar can be sold by hawkers also to save the people from standing in long queues before utility stores. He was of the opinion that some elements, by creating an artificial crisis of sugar or wheat flour, were actually defaming and creating trouble for the government. He appealed to the consumers of soft drinks, ice creams, sweets, confectionery, etc, to cut their consumption for saving sugar.

Stakeholders urged to resolve yarn price issue

KARACHI: The Pakistan Readymade Garments Manufacturers and Exporters Association has called for immediate intervention of the textile ministry to control rising yarn prices in the domestic market. PRGMEA Chairman Mohsin Ayub Mirza said on Tuesday that all the stakeholders should sit together and develop a mechanism for profit sharing so that neither any industry becomes sick nor the country suffers and loses export markets. He said a 30 to 40 per cent increase in yarn prices and its shortage due to increase in its export would not only hurt this sector but would also affect inflow of future export orders. Owing to current yarn prices, international buyers are not willing to place orders with Pakistani textile sector. He said the steep rise in yarn prices would deprive the country of short-term delivery advantage, which has been its edge over other textile exporting countries. The textile ministry has set a very progressive export target for the industry but we are afraid that we would not only fail in achieving the export target in the absence of any immediate action on the yarn prices issue but it would also bring the industry to the verge of collapse, he said. Although the situation of the textile industry has improved after the introduction and basic implementation of textile policy, the yarn issue alone can badly hurt the value added textile sector in a worst way than the shortage of power and law and order situation. He urged all the stakeholders to converge to one mutually beneficial agenda and make yarn availability possible for the value added textile sector so that all businesses continue to run smoothly.

US to help Pakistani businessmen build global partnerships

ISLAMABAD: The United States wants to engage Pakistan in a long-term and productive dialogue to facilitate Pakistani entrepreneurs in building partnerships with the international business community and tackle the problems of poverty, unemployment and other challenges. This was stated by Paul A Brinkley, US Deputy Undersecretary of Defence (Business and Transformation) and Head of the Task Force on Business and Stability Operation, while addressing the business community at the Islamabad Chamber of Commerce and Industry (ICCI). According to an ICCI press release here on Tuesday, he said that the task force s visit to Pakistan was aimed at interacting with the business community, knowing their views for building stronger ties between the two countries and working together for bringing international businessmen closer to their Pakistani counterparts for exploiting business and investment opportunities to strengthen the country s economy. Speaking on the occasion, Saleem H Mandviwalla, Chairman Board of Investment and State Minister for Investment said Pakistan was a dynamic country blessed with immense human talent, adding that the US should help the country in developing skills and expertise of its human resources.

He said the purpose of introducing the US task force on business and stability operation to the country s chambers was to provide them an opportunity to get a macro picture of Pakistan s business environment and to explore new opportunities for enhancing investment in different sectors of Pakistan s economy. He expressed hope for more future trips of the US task force to facilitate Pakistani businessmen in improving their business skills and strengthening their links with their international counterparts. ICCI President, Zahid Maqbool, in his welcome address said that US was the largest trading partner of Pakistan, but still the current bilateral trade and investment do not reflect the true potential of both countries. He said that US should provide easy access to Pakistani products in its markets and rationalise its tariff on Pakistani exports, particularly textile products. Speaking about the Bilateral Investment Treaty (BIT), he said it should be based on the principles of equality and fairness providing reciprocal advantages to Pakistani investors in the US. He said the US should help Pakistan exploit its immense natural energy resources including wind, coal, hydro and solar energy potential, which provide cheap energy as compared to thermal power. He invited US investors for collaboration in energy, oil and gas, infrastructure development, agriculture, IT and many other sectors of Pakistan s economy and for starting joint ventures here.

Bosicor posts heavy loss of Rs10.33bn

KARACHI: Loss after tax of Bosicor Pakistan refinery has jumped to Rs10.33 billion for the year ended June 30, 2009. It will be worth mentioning here that the company had managed to book a profit after tax of Rs15.12 million last year (2008). Accordingly, loss per share translated into Rs26.35 against earning per share of Rs0.04 in 2008. The loss for 2008-09 has arisen primarily from exchange losses of Rs4.4 billion, an operating loss of Rs4.5 billion and financial charges of Rs1.78 billion, the company said in a communique to the Karachi Stock Exchange. During the year under review, the company achieved gross sales of Rs54.77 billion and net sales of Rs44.62 billion as compared to gross and net sales of Rs40.09 billion and Rs35.81 billion respectively last year, it added. During the year due to unprecedented losses, the company faced severe constraints in meeting its financial obligations. At this crucial phase, the company s sponsoring shareholders again showed commitment and endorsed their financial plan prepared by the management of the company and arranged financial support amounting to Rs4.2 billion. This enabled the company to partially meet the required funding gap from the losses, said Bosicor CEO Amir Abbassciy in the statement.

Women asked to play role in economy

LAHORE: Lahore Chamber of Commerce and Industry Vice President Faisal Iqbal Sheikh asked women entrepreneurs to play their role with greater reliance, self esteem and dedication for economic growth of the country. The LCCI vice president was speaking at a function arranged in honour of women entrepreneurs at the LCCI on Tuesday. LCCI former president Mian Shafqat Ali and Convener Standing Committee on Women Resource Centre Nasira Taskeen also spoke on the occasion. He said no country in the world could prosper and progress without due participation of women in all spheres of life. He said according to the UN report the economic development is closely related to the advancement of women. In countries where women have advanced, the economy is usually steady. By contrast, in countries where women have been restricted, the economy is stagnant. Taskeen said the LCCI would utilise all its resources to solve the issues being faced by business women.

She said all measures were being taken to ensure the participation of women entrepreneurs in LCCI s foreign delegations or for their participation in foreign exhibitions as they had to face troubles with particular reference to their business visits. Speaking on the occasion, the Lahore Chamber of Commerce and Industry former president said women constitute 52 of the total population of the country but only 11 per cent are engaged in business activity and are contributing to the national economy while the rest is confined to household affairs therefore there was a dire need to engage more and more women into business activities with a view to promoting the economy. He said today women are well aware of their rights and they are entering into non-traditional businesses like boutiques, beauty parlours, textile designing, printing and publishing, architecture, banking, IT, business management, fashion designing et cetera. He assured the Lahore Chamber of Commerce and Industry to leave no stone unturned for the betterment of women entrepreneurs. He said they should acquire modern techniques for business promotion and come forward with new ideas.

Trade between Pakistan, Lanka strengthens after FTA

KARACHI: Consul General of Sri Lanka, VS Sidhat Kumar on Tuesday said Sri Lanka believes in market-oriented policies for helping increase export trade. In a meeting with members of SITE Association of Industry (SAI) here at the Association s office, Kumar said foreign investment is encouraged. Sri Lanka s most dynamic sectors now are food processing, textiles, beverages, port construction, telecommunications, insurance and banking, said an SAI statement here. He said that bilateral trade between both countries has been strengthened through an increase in the number of products that can be imported from Sri Lanka under the final phase of Free Trade Agreement (FTA) effective from March 20, and the number is 4,000. He identified these imports as fish, meat, vegetable, foliage, plant, sugar, biscuits, pastry, cakes, mineral products, fibre boards, leather and leather-based products, footwear, gems, jewellery, value-added copper products, electrical items, printed circuits, bicycles, boats, and floating structures. Similarly, he said, there is also a great demand for Pakistani products. Pakistan can export cotton yarn and fabrics, potatoes, fresh or chilled, pharmaceutical products, knitted or crocheted fabrics, articles of iron and steel, galvanised pipes, rice, fish and other sea food, other made-up textile articles, articles of apparel and clothing accessories, rods of refined copper, etc. Kumar said that Pakistan has become the second largest trade partner for Sri Lanka in the South Asian region. Trade between the two countries increased to $270 million in 2008. Sri Lanka s exports to Pakistan also increased on the import of coconut products, tea, rubber and rubber-based products by Pakistan.

Imports from Pakistan mainly consist of rice, vegetables, pharmaceuticals, potatoes, textiles, and apparel. Only the export of valued-added textiles has reached more than $100 million. Responding to a question about the exchange of skilled workers, technicians, and supervisory staff in the field of textile, especially valued-added textile, he welcomed the idea and said that he would recommend it to the government for easing the procedure so that more skilled manpower could come to Pakistan and assist the textile units in producing quality products. He also mentioned that Sri Lanka also has specialists and technical supervisory staff in other fields too. Pakistani entrepreneurs can avail their services as well. Bilateral trade is also improving due to liberalisation through FTA. The Consul General, however, regretted that investment from Pakistan is not coming despite a liberal investment policy. Many sectors are available for collaboration in Sri Lanka. He extended an initiation to Pakistani investors to come to Sri Lanka and invest there. The Sri Lankan garment sector is highly equipped educationally and professionally. The scope for herbal medicine is also very high in Sri Lanka. The Consul General extended an invitation to SITE Association members to participate in the Sri Lankan exhibition of Agri Livestock and Fisheries scheduled to be held in November. He also informed that the Karachi Chamber of Commerce and Industry is holding a seminar on Free Trade Agreement between Pakistan and Sri Lanka in the first week of December, to discuss ways to boost two way trade and to get maximum benefit form the agreement between the two countries, and noted that it would be a good opportunity for the local businessmen to gain awareness about two-way trade between Sri Lanka and Pakistan. Earlier, Chairman SITE Association, Salim Parekh welcomed the Consul General and acknowledged the progress that both countries are making in terms of bilateral trade, especially after the free trade deal was signed in the recent past. Chairman International Relations and Diplomatic Affairs Committee SITE Association, Senior Vice Chairman SITE Association, Naseem Anwar, also spoke at the occasion.

Iron-fortified flour production gains pace

LAHORE: The mandatory supply of iron-fortified wheat by World Food Program has accelerated. The number of flourmills producing fortified atta has reached 92 in past one year, 40 of them in NWFP. Flour fortification with iron has suddenly picked up in Pakistan as the number of flourmills adding iron in flour has increased from 68 in 2008 to 160 particularly in NWFP where 40 mills were added after the Swat operation. Iron (Fe) deficiency is a major cause of anaemia in children and pregnant women. According to UNICEF estimates, iron deficiency affects half of the developing world s infants, undermines the health of 500 million women of reproductive age and leads to more than 60,000 childbirth deaths a year. Iron deficiency is also stated to be one of the major causes of high infant mortality rate in Pakistan. It also causes a range of other problems in millions of people, including impaired cognitive development in children, fatigue, maternal mortality and low productivity in the workplace. As wheat flour is the staple food of majority in Pakistan it was the most suitable food for iron fortification. The wheat flour fortification program was initiated in 1997. Trials were conducted for various iron compounds to find out the efficacy and safe ratio of iron compound that could be added in flour. In 2002 Global Alliance for Improved Nutrition (GAIN) provided $3 million to Pakistan to procure NaFeEDTA a substance containing bio available iron that could be mixed in flour.

It leaves no taste when added to food and remains stable under storage and cooking conditions. It also prevents rancidity, while research into the product s molecule has proved that compound is absorbed into the human body two to four times better than with other iron compounds. The mills were required to buy the iron mixer from their own resources while NaFeEDTA was to be provided from the GAIN grant to the flourmills free of cost. The selected mills were bound to supply the atta bags at normal atta rates. Introduction of fortified flour was slow in Pakistan. Three years after grant only 50 flourmills in Pakistan started fortifying flour with iron. The process slowed down thereafter and only 18 more mills were added during 2004-2008. Pakistan was way behind the target of adding 150 flour mills in the fortification program by 2010. The speed of fortification however picked up after 2008 and 92 more mills have been added since then enabling the country to exceed the target a year ahead. GAIN acknowledged this achievement by awarding Flour Fortification Initiative Leadership award in Italy to the coordinator flour fortification in Pakistan Dr Bilal Aslam Soofi. Now fortified flour is available to 30 per cent of the urban population of Pakistan, said Soofi. He said the iron compound grant provided by GAIN would expire next year. He said that at the award ceremony a request was made to GAIN to extend the grant for free supply of NaFeEDTA for another year. He said even if the grant is not provided it would add only Rs2 per 20 kg in the cost, which he said is affordable in view of the huge health benefits associated with it. Fortification of flour with iron is mandatory in most of the developed countries. In Pakistan it is still optional. Nutritional experts have advised the government to make it mandatory by 2012 so that the menace of anaemia could be addressed.

Textile package

KARACHI: The State Bank of Pakistan has received Rs5 billion from the government under the textile package but there are no instructions for utilisation of the amount despite several demands by the textile industry. According to a letter of the State Bank addressed to the Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA), the Ministry of Textile is yet to provide the exact heads where this amount would be utilised. The letter says that budgetary allocation was required for several schemes announced in the Trade Policy including duty drawback for the textile sector, subsidy to PTA users and Export Finance Scheme (EFS) related incentives and also for the disbursement of remaining 60 per cent amount of R&D claims. We cannot start utilisation of the released funds unless Mintex clarifies under which schemes the funds are to be utilised and in what proportion, said the letter. The textile industry has been facing financial crunch and is still waiting for the R&D claims. There are 60 per cent dues of R&D yet to be paid. The PRGMEA, following the letter of the State Bank, has written to the Ministry of Textile to release funds for R&D immediately. Bilal Mulla, Chairman FPCCI Standing Committee on Value Added Textile Products and former chairman PRGMEA, told The News that due to absence of coordination between Mintex, SBP and Ministry of Finance the allocated fund was lying unutilised with the SBP.

Though the textile policy was announced on August 12, necessary notifications were issued on September 1 and here we stand in mid-November without real benefit of the policy. He said implementation of much-appreciated textile policy till today was very low. The textile policy announced with long-term vision and textile export target of $25 billion in next five years was hailed by all textile sectors across the country. However on September 1, the required notification was issued by Mintex pertaining to duty drawback with full procedure of refund through the State Bank of Pakistan (SBP). Everyone knows the package of Rs40 billion for exports has already been approved in budget 2009-10 then why there is delay in issuance of instructions to the SBP, which is responsible for the disbursement of claims under the said notification, Mulla said. The current procedure of registration and verification of export units is very cumbersome, he said, was the main hurdle in implementation of notification under the Textile Policy. We suggest that Mintex should push Textile Commissioner Office, Karachi and regional offices in Lahore and Faisalabad to resolve the issues locally. Exporters belonging to different parts of the country are unable to access Islamabad Office, said Mulla. Rana Muhammad Farooq Saeed Khan, Minister for Textile Industry, in a recent programme said that each word of the textile policy would be implemented. But, no one knows why State Bank has not been instructed to utile the funds available under textile package.