Market Report – Pakistan 13th October 2018

Local Cotton Highlights:

• Panic buying was again witnessed in local cotton market during the previous week and both mills, spinners have remained busy in bulk buying to maintain their stocks, mills did not show any reluctantly in buying of lint cotton due to rising fears of shortage of fine quality and higher rates of imports.
• Prices were firm owing to the tight supplies against strong demand. Continued increase in the rates of dollar and tight supply of lint cotton, propelled buyers to keep buying in order to refrain from the future losses. It seems that prices may not go up sharply, but it seems that rates to move up instead of falling in coming days. In local market lint prices have gone up by Rs600 to Rs 800 per maund recently. Internationally prices moved both ways in this week.
• Arrivals of cotton in the ginning factories are going up and the volume of business has also increased. Around 5 million bales have arrived. In this season crop seems to be lower from the estimated figures. It is being estimated that no more than 11.00-11.20m bales would have been produced in this season. The ginners are currently holding a higher quantity of cotton for better profit in days to come.
• It seems that cotton Import from India will not be viable in coming days because china is placing huge orders for cotton buying, therefore there is a panic in local market which is encouraging buyers to keep buying.
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• Prices of seed cotton (Kapas/Phutti) in Sindh were in range from Rs 3800 to Rs 4250 per 40 Kgs, while in the Punjab the seed cotton prices reportedly ranged from Rs 3800 to Rs 4200 per 40 Kgs. Prices of lint for the new crop (2018/2019) from Sindh are said to have ranged from Rs 8300 to Rs 8850 per maund (37.32 Kgs), while the lint prices from Punjab reportedly ranged from Rs 8400 to Rs 8900 per maund. Overall deals were made between the range of USC 76~81 Lbs. (8,300~8,900/ maund).

New York Cotton Futures:

• New York Cotton futures opens with higher levels on Monday as compared to previous week’s closing figures.
• NYCF further marched on downward side in two sessions, later recovered in last two sessions and closed on positive side by the last day or previous week.

At last day of the week, DEC 2018 closed at 78.37 with rose of 82 points.

At last day of the week, MARCH 2019 closed at 79.55 with increase of 106 points.

At last day of the week, MAY 2019 closed at 80.41 with rose of 120 points.

Liverpool Index:

A was opened at 85.40 with slightly on a higher level from previous week’s closing figure.

• In this week Index “A” took a jump in next session and later showed downward trend in this week, while closed on positive side.
• The last day of the week, LPI “A” closed at 86.15 with increase of 75 point as of opening figure of the week.

Crude Oil:

Crude Oil prices opened at USD 74.29 on a lower level as compared to last weeks closing figures.

• In this week crude oil prices rose in next session and later dropped in coming two consecutive sessions, while recovered on closing but on a negative side at the end of week.
• In last day of the week, Crude Oil price closed at USD 71.34 with decrease of USD 2.95 cents as of opening figure of week.

Pakistan Currency Exchange Rates

In the last week, values of Pak rupee were unstable against US Dollar and other major currencies have also shown mix trend in both Interbank and open markets.

• At the end of week, Euro closed on a positive note with figure of 1.16 and British Pound also closed on positive note with figure 1.31 against USD.

Local Yarn:

• Local yarn market jumped by 78% after devaluation in Pak rupee against US dollar. Initially spinners held their prices and calling started by end of this week with business activity not seen on these new prices. Mills were in hurry to cover cotton and sell more yarn on fresh prices but buyers were not interested in procurements.
• PSF price increased by Rs.5/kg dated 9^th OCT 2018 after currency devaluation and expected to increase more if dollar closes on high note. Crude oil dropped $4 during this week and import prices changed after devaluation in china currency as well.
• Faisalabad trading market remained salient and only limited counts activity was reported. Fine counts demand has also remained slow and PC yarn business also remained stagnant.

Following are current asking prices of yarn in local market based on ex mills:

Export Yarn:

• Korean market remained dull and inactive. Almost no activity was noticed during previous week. HK market remained slow and very limited inquiries were discussed. No considerable work has been done from this region. Many suppliers of regular brands visited HK in last week.
• From European market there were considerable number of inquiries. However, due to the depression of other markets, customers are really afraid of placing orders. Customers are in the opinion that prices will reduce further, so either they willing to wait further or giving extremely low bids. Indian suppliers are able to grab many orders mainly in combed and Organics as their prices are very attractive in comparison of Pakistan export yarn prices.
• Still there are many inquiring in pipeline and if the prices get stable now then many inquiries will get materialize. However, after sharp fall of Pak Rupee against Us dollar things have become unstable which eventually jeopardized the opportunity of order finalization.

Local Fabric:

• The local fabric market has been limping throughout the week for both narrow and wider width fabric markets owing to sharp rupee devaluation which stunned the market players and therefore market remained standstill till the end of the week.
• Negligible activity reported in the market with firm posture of both narrow and wider width fabric markets. Weavers are offering delivery 3^rd week ~ end November for narrow width and early ~ mid December’18 for wider width looms.

Local fabric prices of regular items are as follows:

Local Fabric prices of regular items i,e. 20×16/128×60=63”at USD 1.18 to 1.20 per yard, 16×12/108×56=63” in range of USD 1.26 to 1.28 per yard and 20×20/108×58=63” was sold in range of USD 0.98 to 1.00 per yard based on ex mills.

Export Fabric:

• After a sudden increase in the price of raw materials and exchange rate, the business activity became dull. Suppliers have increased their fabric prices about 4~5% due to increase of raw material which is 12% and yarn prices which are about 7%. Customers avoided buying due to this increase and holding their buying decision until the market gets settled.
• No considerable inquiries were received from Korea, China, Bangladesh, Vietnam, Japan and Malaysia.
• Good suppliers are booked till 3^rd week of Nov and offering end Nov onward deliveries whereas average suppliers are booked till early of Nov and offering mid Nov onward deliveries.
• Exchange rate may further go up which will affect the raw material prices however internationally the fabric prices are stable and customers are not ready to pay high prices. This factor may push the prices to go down in coming days as there are buying interest on higher prices.

Following were the closing rates based on CNF Far Eastern ports.

Prices of fabric commodity items i.e 20×16/128×60=63”, in range of 1.22 to 1.24 per yd, 16×12/108×56=63” between USD 1.32 to 1.34 per yd and 20×20/108×5863” in range of USD 1.04 to 1.06 per yd based on CNF Far Eastern ports.

• Average number of inquiries were reported from Germany, Italy, Portugal. Other markets like Spain, France and Belgium remained almost quite during the week under review. Customers have shown their resistance on increase of fabric prices which jumped up by 4~5% due to increase in yarn prices.
• Increase in prices for raw material, yarn and fabric prices were due to sudden increase of local currency against U.S. dollar by 7%. USA buyers have sent programs and passed inquiries as well as other articles in T-180~T300 which are under discussion. However, they are interested to get better prices rather than current prices.
• Work wear prices also went up due to increase in polyester prices in domestic as well as in international markets.
• Wider width suppliers could not extend their sales due to un-certain market situation hence they are still offering mid ~ end Dec onward deliveries.

Home Textiles:

• Home textile market was slow in last week.
• Customers floated inquiries in the market but speculatively Pakistani currency devaluated. Due to this suppliers held all their prices and informed customers that they will quote the new programs or accept new orders once the Pakistani currency gets stable.
• European & USA buying was slow. Customers have good orders to place but held them till the market gets stable.
• Yarn prices also increased due to currency devaluation and due to this, prices trends were on the upper side, customer were not willing to place new orders on current prices and held their current orders. Keeping in view current market situation it seems that market will be stable in upcoming weeks once Pakistani currency gets stable.
• Suppliers have orders for October & November 2018 but still they have capacity for more orders. As far as shipments are concerned suppliers are offering 65 to 70 days for new orders & for repeat orders supplier are offering 50 to 65 days.

Going Forward:

• In Local Yarn it is expected that market will continue to base on raw cotton prices plus currency levels. Trends of yarn will be according to demand and supply of different counts in market which will lead to a set price level.
• In Export yarn previous week is slow in term of order finalization, but yarn expo which has started today seems to be promising.
• In Local yarn market the headlines of Pakistani Rupee devaluation and weak currency sentiments forced the sellers and buyers to remain sidelined. Both buyers and sellers remained clueless to foresee market future.
• It is expected that export fabric prices will remain strong during this week due to firmness in raw material and yarn prices.
• For Home Textiles market overall condition has been slow and business activity was not up to the expectation and hopefully in coming days market activities will be improved once currency matter solved gets resolved.