Market Report – Pakistan 29th October 2018

Local Cotton Highlights:

• Buyers were busy in continuous buying in fear of shortage of the quality lint in days to come, while activity came down by end of the week due to less buying interest. Mills were on the sidelines due to increasing tensions over fluctuations of dollar versus the rupee.
• Ginners were quite firm and were busy in selling, some were in conscious selling in expectation of more profit in the days to come.
• Cotton prices moved both ways in the international markets, while in local cotton market prices remained firm in early days of the week and later dropped due in effect to the drop in US$ prices. Within three days and by the end of the week, cotton prices dropped down by Rs.200 to Rs.300 per maund (37.32 Kgs).
• It seems that price will remain firm in the days to come and activity will remain good due to the less quality lint behind with ginners and buyers will rush to buy quality lint from the local cotton market.
• Pakistan is reported to have imported about 1.8 million bales of cotton till now from America, India, Brazil and Turkey from the beginning of this season (2018/2019).
• Prices of seed cotton (Kapas/Phutti) in Sindh were in range from Rs 3800 to Rs 4200 per 40 Kgs, while in the Punjab the seed cotton prices reportedly ranged from Rs 3800 to Rs 4100 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 77~84 Lbs. (8,400~9,100/ maund).

New York Cotton Futures:

• New York Cotton futures opens on a higher level on Monday as compared to previous week’s closing figures.
• NYCF further dropped in next two sessions, while recovered in last 2 sessions, hence closed on negative side by the end of the week.

At last day of the week, DEC 2018 closed at 78.53 with decline of 149 points.

At last day of the week, MARCH 2019 closed at 79.82 with drop of 163 points.

At last day of the week, MAY 2019 closed at 80.81 with dip of 158 points.

Liverpool Index:

A was opened at 87.25 with same level from previous week’s closing figure.

• In this week Index “A” showed mix sentiment and move on both ways, while closed on negative side.
• At last day of the week, LPI “A” showed closed at 86.80 with decrease of 45 point as of opening figure of the week.

Crude Oil:

Crude Oil prices opened at USD 69.17 with slightly higher level as compared to last week closing figures.

• In this week crude oil prices dropped drastically in next session and later in all sessions its recovered but closed on negative side at the end of week.
• In last day of the week, Crude Oil price closed at USD 67.59 with decrease of USD 1.58 cents as of opening figure of week.

Pakistan Currency Exchange Rates

• In last week, values of Pak Rupee showed recovery against US Dollar and other major currencies also showed mix trend in both Interbank and open markets.
• At the end of week, Euro closed on a negative note with figure of 1.14 and British Pound also closed on negative note with figure 1.28 against USD.

Local Yarn:

• Local yarn market remained under sale pressure due to oversupply of yarn in market. Prices remained soft and stable in calling and limited business materialized on buyer price only. Most of mills have stock in coarser counts due to slow export toward China.
• PSF price remained stable during this week but expected to drop Rs.4~5/kg by upcoming week. Crude oil, PTA, MEG prices remained soft during this week and import polyester prices dropped in China by week ended.
• Faisalabad trading market remained salient and only limited counts activity was reported. Fine counts demand also remained slow and pc yarn business also not reported after news for decrease in fiber price.

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

Export Yarn:

China:

• Export yarn china market remained dull and slow for another week in a row. Customers are still not confident to place future placements due to depreciation of RMB against USD which may show further decline in days to come. So, very few deals were materialized where customers got required price and delivery.
• On the other hand, suppliers are becoming slightly comfortable as their stocks are depleting after getting LCs from customers at negotiated prices. Even then, they are happy to ship the goods as USD parity is at edge for them in export but profitability is not witnessed. It is projected that in upcoming couple of weeks, market will remain under same sentiment and we might see sluggish business activity from customers.
• If we look at the spinner current situation, they are going through tough phase as Cotton prices are continuously on rise whereas yarn sale price is quite on the lower side.

Other Markets:

• Insignificant activity has been noticed in Export Yarn Market. Prices remained stable in term of asking but spinners were much interested to receive the final bids from buyer’s side to catch every possible order.
• In Far Eastern market, Korean customers remained quiet with no major activity. For Pakistan this market is certainly having very less potential as far as Yarn is concerned. Most of the top-quality suppliers already working to find new markets to fulfil the gap of selling to Korean Market.
• As far as Hong Kong market is concerned, customers inquired for few and large volumes inquires, however decision has not been made yet. It is expected that traders will book good quantity of double yarns in upcoming week. Overall Hong Kong market slightly picked up.
• European Market remained active and floated good number of inquiries during the start of the previous week. They were interested to place the orders but very reluctant to buy the bulks. So, despite of demand, no bulk business has been materialized but certainly this market behaves better as compared to rest of the markets.
• Turkish buyers remained silent only few deals of double yarns reported on lower level of prices from the medium sized mills.
• Most of the yarn counts are competitive from India and desperation level of Indian spinners is also high. So many orders slip to India particularly from Portugal and Poland.

Local Fabric:

• After a strong surge in local fabric market a very calm situation was noticed in the previous week under review whereas prices showed firm posture till mid of the week however prices slightly dipped towards the end of the week owing to hint of downward trend in local yarn prices.
• Weavers booked orders at previous week’s price level and extended their booking till 3^rd week December ~ end 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:

• Another week went slow for Far Eastern markets as customers have exchanged limited number of inquiries. Chinese customers have sent their inquiries but seems like those were just for price checks as no orders were finalized.
• Korean customers have no demand now a days hence they were aside of buying during the week under review.
• Bangladesh, Vietnam, Thailand, Indonesia and Sri Lankan markets were mixed as some of the customers have exchanged their demand and booked their orders as per current market prices.
• Suppliers kept their prices stable during the week however, they softened their prices by 1~2% towards the end of the week due to soft yarn prices. Currently good suppliers are booked till end of Dec and offering only Jan onward deliveries whereas average suppliers are booked till mid of Dec and offering end Dec onward deliveries. Generally, suppliers have good sales position both in narrow and wider width hence they are in comfortable zone.
• Average number of inquiries were received from European customers mainly from Germany, Italy and Spain however limited booking was observed.
• Prices for wider width became little soft by 1~2% due to soft raw material prices. Wider width suppliers are comfortably booked till mid of Jan and offering end Jan onward deliveries. USA buyers have good demand during the week hence they have exchanged good number of inquiries resultant good orders with Sulzer and Air jet units.

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

20×16/128×60=63”, in range of 1.21 to 1.23 per yd, 16×12/108×56=63” between USD 1.31 to 1.33 per yd and 20×20/108×5863” in range of USD 1.03 to 1.05 per yd based on CNF Far Eastern ports.

Home Textiles:

• Home textile market has remained slow last week. Customer floated very few inquiries in the market. Most inquiries were for price checking.
• European & USA markets buying was firm. Customers have good orders to place but inquiries are still awaited to mature as customer is waiting for market stability to get competitive prices to place their orders.
• Yarn prices were also firm and no significant change in prices seen. Keeping in view current market situation, it seems that market will be stable in upcoming weeks once Loan from KSA gets transferred to Pakistan, which will have an effect over USD rates and overall FCY balance.
• Suppliers have orders for up to mid December 2018 but still they need more orders. Overall suppliers are in pressure to get new orders to fulfill their capacities at 100%.
• As far as shipments are concerned supplier are 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 which will lead the price levels.
• In export yarn, China market showed lethargic business activity as customers are buying limited quantities very cautiously. We might see same sentiment for further couple of weeks until n unless Chinese customers are back on track. In other markets it is expected that market will remain same, buyer will prefer to buy in chunks instead of placing extended programs.
• In Local fabric market last quarter galloped at a faster clip which may indicate that future market sentiments will remain firm against the whim of many market pundits.
• In export fabric market it is forecasted that fabric prices will remain stable in coming days and business activity may improve.
• In home textiles market overall condition was firm and   business activity was not seen as expected and hopefully in coming days market activities will improved once currency gets stable.