Market Report – Pakistan 22nd October 2018

Local Cotton Highlights:

• Active buying was seen in early last week by buyers and spinners in local cotton market, however activity slowed down by end of the week due to diminished buying interest. Cautious traders were on the sideline in expectations of more gains in dollar value versus the rupee. The mills were keen to purchase fine quality cotton to replenish their stock but not at the higher rates.
• On the other hand, ginners were not in a hurry to dispose of their stock in expectations of more increase in the value of dollar versus the rupee.
• Prices increased in local market after the issuance of the Pakistan Cotton Ginners Association (PCGA) fortnightly report. Fortnightly arrival figures show an increase against last year. Over 6 million bales of seed cotton (phutti) reached ginneries across the country. Cotton prices have risen since the beginning of this month by about Rs 1200 to Rs 1300 per maund (37.32 Kgs) due to the devaluation of the Pakistani rupee. The rates of cotton futures were almost lower in the world markets in the process of trading activity.
• This year (August 2018/July 2019) it is expected that Pakistan will produce nearly 11.5 million bales (155 Kgs) on an ex-gin basis in its cotton arrivals report, the Pakistan Cotton Ginners Association (PCGA) has shown the current year’s level at (August 2018/July 2019) at 6,044,194 bales against last year’s arrivals at 5,984,486 bales.
• On the global economic and financial front, generally most of the news appeared negative with a tendency to get worse. The tariff war which started between America and China earlier during the year is slow but surely going global.
• It seems that price will remain firm in days to come and activity will remain good due to the less quality lint with ginners at the moment and buyers will rush to buy quality lint from the local cotton market where its easily available from. Imported cotton will also not be feasible due to the devalue of pak rupees vs dollar.
• Prices of seed cotton (Kapas/Phutti) in Sindh were in range from Rs 3800 to Rs 4400 per 40 Kgs, while in the Punjab the seed cotton prices reportedly ranged from Rs 3800 to Rs 4400 per 40 Kgs in local market. Prices of lint for the new crop (2018/2019) from Sindh are said to have ranged from Rs 8500 to Rs 9100 per maund (37.32 Kgs), while the lint prices from Punjab reportedly ranged from Rs 8400 to Rs 9100 per maund. Overall deals were made between the range of USC 77~83 Lbs. (8,400~9,100/ maund).

New York Cotton Futures:

• New York Cotton futures opens with higher levels on Monday as compare to previous week’s closing figures.
• NYCF further marched on downward trend in two sessions, later recovered but, dropped again on closing and closed on negative side by the end of the week.

At last day of the week, DEC 2018 closed at 77.92 with decline of 80 points.

At last day of the week, MARCH 2019 closed at 79.36 with drop of 48 points.

At last day of the week, MAY 2019 closed at 80.45 with dip of 20 points.

Liverpool Index:

A was opened at 87.65 with higher level from previous week’s closing figure.

• In this week Index “A” took jump in next session and later showed downward trend in last week, while closed on the negative side.
• At the last day of the week, LPI “A” closed at 87.25 with decrease of 40 point as of opening figure of the week.

Crude Oil:

Crude Oil prices opened at USD 71.78 with slightly higher level as compared to last week closing figures.

• In this week crude oil prices showed mix trend in whole week, while closed on negative side at the end of week.
• In last day of the week, Crude Oil price closed at USD 69.12 with decrease of USD 2.66 cents as of opening figure of week.

Pakistan Currency Exchange Rates

• In last week values of Pak rupee was unstable against US Dollar’s and other major currencies in both Interbank and open markets.
• At the end of week, Euro closed on a negative note with figure of 1.15 and British Pound also closed on negative note with figure 1.31 against USD.

Local Yarn:

• Local yarn market remained under sale pressure due to oversupply of yarn in the market. Prices remained on a higher side and business materialized on buyer’s price only. Most of mills have stock in coarser counts due to slow export towards China.
• PSF price increased by Rs.2/kg dated 15^th OCT 2018 after currency devaluation and expected to remained stable and firm. Crude oil PTA, MEG prices remained stable during this week and import polyester price dropped in China by week’s end.
• Faisalabad trading market remained salient and only limited counts activity was reported. Fine counts demand also remained slow and PC yarn business was also not reported after increased prices.

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

Export Yarn:

• Nominal activity has been noticed in Export Yarn Market. Prices remained stable, however suppliers were showing softness after getting firm bids from customer’s end as there is immense selling pressure on suppliers due to less activity in market.
• Due to the currency devaluation, market is very unstable. Our domestic cotton is firm; however, flexibility was noticed in supplier asking.
• In Far Eastern market, Korean customers floated limited inquiries and very few deals of top-quality brands have been finalized. Demand is dull in Korea at the moment. As far as Hong Kong market is concerned, customers inquired for few and large volumes, however decision has not been made yet. Overall Hong Kong market is pretty slow.
• European Market remained inactive and floated limited inquires during the start of previous week. They do want to place orders for their urgent needs, however, keeping in view the down ward trend of prices, most of the customers have held their decision of buying. Few customers are discussing about the extended deliveries till Jan’19.
• Turkish buyers remained totally side line due to their currency fluctuation. It is expected that their market demand will remain slow in terms of buying in the days to come.

Local Fabric:

• The local fabric market continued to advance for the second week for both narrow and wider widths. Buyers floated active inquiries and also booked orders at increased prices @ approx 2%~3% for both narrow and wider width fabric.
• Currently all major weavers are booked for narrow width till end of November ~ early December’18 whereas wider width looms are booked till mid-December ~3^rd week December’18 and offering onward deliveries.

Local fabric prices of regular items are as follows:

20×16/128×60=63”at USD 1.15 to 1.17 per yard, 16×12/108×56=63” in range of USD 1.24 to 1.26 per yard and 20×20/108×58=63” was sold in range of USD 0.95 to 0.97 per yard based on ex mills.

Export Fabric:

• Far Eastern markets remained quiet and dull as customers were not taking interest in fresh buying. Suppliers have tried to attract buyers by giving special prices but limited business was witnessed at very low prices. Few deals were reported with Korean buyers whereas other markets including China, Bangladesh, Vietnam, Thailand and Indonesia limited their buying interest.
• Asking prices were stable till early of week and then started getting firm due to increase in cotton and yarn prices. Most of the customers were monitoring the market trend carefully before their buying decisions.
• Currently good suppliers are booked till end of early of Dec and offering end Dec onward deliveries whereas average suppliers are booked till end of Nov and offering early ~ mid Dec onward deliveries. Generally, sales are in comfortable zone with all suppliers hence they are not in panic selling now a days.
• European customers have exchanged good number of inquiries in bulk quantities during the week for which orders are under negotiation process. Customers from Germany, Portugal has discussed their new demand aggressively out of which they have confirmed limited orders and bulk orders are still under discussion. Limited inquiries were received from Spain, France and Belgium during the week under review.
• USA buyers have also discussed good number of inquiries however no considerable business was witnessed. Suppliers are expecting good orders from Europe and USA in coming days.
• Polyester prices were further increased which pushed the work wear fabric prices further up by 2~3%.
• Wider width suppliers have got decent number of inquiries from their European customers as well as from USA buyers resultant limited buying with selected suppliers. Wider width suppliers are booked till mid of Dec and offering end Dec ~ early Jan onward deliveries. Narrow and wider width suppliers both have good sales coverage as they have booked good quantities in various markets thus have extended their sales upto 50~60 days.

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

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.

Home Textiles:

• Home textile market was slow in last week. Customer floated inquiries in the market but the yarn prices increased and dramatically Pakistani Currency devalued. Due to this supplier held all their prices and informed all customers that they will quote the new programs or accept new orders once the Pakistani currency is stable again.
• European & USA market buying was slow. Customers have good orders to place but held their order confirmations till the market gets stable with price levels.
• As far as shipments are concerned supplier is offering 65 to 70 days for new orders & for repeat orders supplier are offering 50 to 65 days.

Going Forward:

• In local yarn market it is expected that market will remain under sale pressure till exports are not stream lined. Further trends of yarn will be according to demand and supply of different counts in market which will lead to new price levels.
• Export yarn market has remained slow and stagnant for some markets, no significant volumes have been noticed so far.
• Local Fabric market has picked up and catering to the demand of buyers at increased price levels.
• In Export fabric market it is expected that raw material prices may remain firm and fabric prices will remain in same range without any considerable change.
• In Home Textile’s market overall condition was slow and business activity was not seen as expected but hopefully in coming days market activities will get improved once currency matter is resolved.