Iran export from Sistan Baluchestan up 32%

The value of non-oil export from Sistan-Baluchestan province, in the southeast of Iran, rose 32% in the first nine months of the current Iranian calendar year (March-December, 2022), as compared to the same period last year, according to a provincial official.

Mojtaba Shojaei, the Director General of the province’s governorate’s office of economic affairs coordination, said 1.165 million tons of products worth US$165 million were exported from Sistan-Baluchestan in the mentioned nine-month period, indicating also 78% growth in terms of weight YoY.

He named cement, clinker, travertine stone, coal coke, coal, dates, gas, vegetables, agricultural poison and agricultural products as the main exported items, and Pakistan, Afghanistan, India, Iraq, Kuwait, the United Arab Emirates (UAE), Turkmenistan, Uzbekistan and Indonesia as the major export destinations.

The official further announced that 1,157 tons of commodities valued at US$1.184 million were imported to the province in the first nine months of the present year, with 17% rise in value, while 26% drop in weight, year on year.

He named wheat, rice, cattle corn, cattle oats, mango, banana, sesame, potato, live livestock, fabric, tea, car spare parts, light and heavy car tires, cooling devices, spices, and fish as the main imported items, and Russia, Pakistan, France, Germany, India, Brazil, United Arab Emirates, China, Thailand and Afghanistan as the major sources of imports during the first nine months of the current year.

Based on the data released by the Islamic Republic of Iran Customs Administration (IRICA), the value of Iran’s non-oil export rose 19 percent from the beginning of the current Iranian calendar year (March 21, 2022) up to December 31, as compared to the same period of time in the past year.

According to the IRICA data, Iran exported 97.843 million tons of goods valued at US$43.088 billion in the mentioned period, also registering 2% increase in weight

Liquefied natural gas, liquefied propane, methanol, liquefied butane, and film-grade polyethylene were the main exported products in the said time span.

Major export destinations of the Iranian non-oil goods were China, Iraq, Turkey, the United Arab Emirates, and India.

The Islamic Republic has also imported 28.18 million tons of non-oil commodities worth $44.337 billion in the first 286 days of the present year, with a 14.7% growth in value and a 10% increase in weight, year on year.

The major items of goods imported into the country in the said period include corn, rice, wheat, soybeans, sunflower seed oil, and cell phones, based on the IRICA data.

The United Arab Emirates was the top exporter to Iran in the mentioned period, followed by China, Turkey, India, and Germany.

Reportedly, the value of Iran’s non-oil trade rose 17% during the mentioned period, as compared to the same time period last year.

Iran traded more than 126 million tons of non-oil products worth over US$88 billion with other countries in the mentioned period.

 

Pakistan stock market witnesses 12 percent increase in daily trading volume

Exhibiting signs of investor weariness and mixed responses to earnings releases, the benchmark index of Pakistan Exchange (PSX) closed the week ended 10^th February 2017 at 49,925 points. Market participants’ response to earnings announcements swayed greatly, with investors continuing to favor higher payouts over earnings growth, and corporate action, particularly in cements kept the sector in the limelight. Average traded volumes rose to 414 million shares, up 12%WoW. Key news flows were: 1) PSMC launched imported luxury sedan Suzuki Ciaz at competitive price, 2) International Steel Limited (ISL) stated in a filing that the National Tariff Commission (NTC) has decided to impose definitive anti‐ dumping duties on galvanized steel coils/sheets for a period of five years, 3) PSO's receivables from different enterprises, particularly power companies, have swelled to Rs277 billion, and 4) As per State bank of Pakistan foreign exchange reserves of the country declined by US$413 million to US$22.03 billion by 3^rd February and the external sector faces increased pressure as its trade deficit widened by 29%YoY to US$17.4 billion during 7MFY17 due to paltry exports and double digit growth in imports. Top performers at the bourse were: LOTCHEM, NBP, ASTL, NML, whereas laggards were: PTC, HUBC, AGTL and ABL. Volume leaders for the week were LOTCHEM, KEL, POWER and TRG. Oil is set to grab the spotlight in the coming week, where crude benchmarks are beginning to inch upwards on positive reviews of the OPEC and non‐OPEC output freeze. Results will remain the center of gravity, where companies reporting in the coming week include AGTL, HBL, FCCL, MLCF, DGKC, UBL, ENGRO and OGDC.

Commencing this week, commercial banks are scheduled to declare their CY16F/4QCY16F results. The first was MCB (8^th Feb), followed by ABL (9^th Feb) HBL (15^th Feb). As a group, the Big‐6 banks are likely to post cumulative profit after tax of Rs127.5 billion for CY16 as compared to Rs129.7 billion for CY15, a decline of 2%YoY. Top‐line growth is likely to be constrained on account of lower yield on earning assets amid ongoing PIB substitution and lower banking spreads (4QCY16 spreads lower by 26bps YoY). However, improvement in credit quality has restricted the earnings decline with provisioning charges for the Big‐6 down by a sizable 81%YoY for CY16. That said, revaluation surplus likely to improve by a significant Rs176 billion, where higher utilization of the same can cause earnings expectations to deviate particularly in case of banks like MCB, NBP and ABL that have sizeable equity portfolios in addition to the bonds portfolio. While CY16 results are expected to remain flattish, price performance should remain hinged upon the following: 1) higher than expected payouts, 2) earlier than expected monetary tightening, 3) formal inclusion into MSCI EM with HBL, UBL and MCB likely to make it to the list.

Latest APCMA data showed that cement dispatches during January'17 remained relatively flat at around 3 million tons, while it fell 12.86%MoM due to heavy rainfall/snowfall impacting local construction activity (domestic demand, a decline of 14.56%MoM to 2.722 million tons in January'17). Exports also remained subdued during the month and declined by 2.71%YoY/+1.85%MoM) due to rising fuel prices/other input costs and import/anti‐dumping duties making it more difficult for Pakistan's exported cement to compete against the indigenous cement. Greater intensity of seasonal effect has slowed down the cumulative domestic demand growth was 9.52% in 7MFY17 as compared to 15.66% in 7MFY16. Though, analysts expect exports growth to remain flat due to prevalence of aforementioned issues, they also believe that domestic demand growth will likely resume double digits growth as construction activity is expected to pick pace due to relatively greater proportion of PSDP releases in second half of fiscal year and record level growth in private sector credit related to construction activity, up 25.25%YoY.

Two of the largest IPPs of Pakistan HUBC and KAPCO are also scheduled to announce their half yearly financial results. HUBC is anticipated to post profit after tax of Rs5.25 billion for 1HFY17 (down marginally) on the back of muted generation, Pak Rupee remaining firm against greenback and picking up of RFO prices. Expensing of higher O&M charges, inflated admin expenses and investment in associate related expenses are expected to taper profitability, while the higher receivables burden is expected to raise financial costs. KAPCO is forecast to post 1HFY17 net profit of Rs4.67 billion up 8%YoY, from lower generation, slight improvements in generation on gas and below the line expenses remaining in check. Devoid of major movement on the expansion front (financial close of CPHGC, TEL, KAPCO Energy) IPPs are expected to remain in the sidelines, for the time being.

A wake up call for ruling junta of Pakistan

Pakistan has an agro-based economy and the country is heavily dependent on imported energy products. As country’s trade deficit is mounting there is need to revisit government policies. The other alarming factors are: 1) extensive borrowing to meet the budget deficit and 2) deceleration in remittances. The added problem is that with the commencement of winter industrial units, particularly textiles units are likely to be a major sufferer and exports of textiles and clothing destined to plunge.

As stated earlier, Pakistan is heavily dependent on imported energy products; any hike in crude oil prices does not bode well for the country, though capital market analysts term the hike good for E&P and downstream companies listed at Pakistan Stock Exchange (PSX). A stronger dollar is likely to keep commodity prices in check, but also expected to make imported commodities more expensive.

Pakistan Steel is closed for months and there are no signs of its commencing production in the near future. Its price has posted 16.4%MoM increase in November, as Chinese producers re-align supply and the government implements a policy of curtailing supply.  This is likely to cause further hike in steel price, which does not bode well for Pakistan

Pakistan is a major user of coal, in cement industry. Coal price drop on Chinese relaxation on mining controls: After reaching a 5-year high, coal price has fallen to US$83.5/ton as the government asked the coal miners to lift up output till the end of end of winter heating season to counter the surging price. The coal price decline has remained slower as the Chinese coal producers were unable to ramp up production quickly due to medium-to-long term supply contracts and time to bring back coal mines into production. Nonetheless, normalizing of seasonal demand post-winters, will likely witness further fall in coal price as China will continue its policy to do away with coal based energy.

Fertilizer is one of the major industries of Pakistan and currently suffers from poor capacity utilization. Added to this is, extremely low international prices of urea, affecting the earnings of local manufacturers. In November its prices rose to US$224/tons as compared to US$201/tons a month ago.  While continuing to recover from lows of US$172/ton seen in July 2015, urea prices remain down 8%YoY as oversupply and weak demand continue. On the domestic front, recovery in international prices is likely to enhance pricing power of local manufacturers, who are already plagued by lower off-take. However, further recovery in off-take remains more likely to be a product of price reduction.

Global cotton prices during November remained higher as compared to last year (up 14%YoY) on the back of continued price recovery. The monthly USDA report featured an increase in global annual production up to 103.3 million bales and virtually no change to world mill-use, resulting in additions to global stocks. Following the global trend, prices in the domestic market remained on the higher side in November. Despite higher-than-expected phutti arrivals, prices of quality cotton move higher because of sustained buying by mills and spinners. Moreover, temporary ban on cotton import from India kept demand of local cotton robust.

This year Pakistan is likely get another bumper crop of wheat but of no benefit. While the surplus can’t be exported, post harvest losses are feared to increase due to inadequate storage facilities. Lack of supporting policies has failed in attracting investors to construct modern warehouses and collateral management companies. Absence of modern silos results in up to 20 percent post harvest losses. Saving this could boost income of farmers and also bring down price of staple grain n the country.