Market Report – Pakistan 5th November 2018

Introducing our new Garment Section Below. We will now regularly include garment industry’s report.

Local Cotton Highlights:

• A general slowdown was experienced last week in local cotton market due to Chehlum, a local religious ritual earlier this week and later social un-ease experienced due supreme courts controversial orders. Due to less working days turnover on cotton buying remained low. On the other hand, buyers and spinners were interested to make deals of high-quality lint due to less cotton crop. Transportation issues remained this week which also slowed down ready cotton business.
• Prices of cotton on the international market were mostly mixed whereas local cotton prices this week remained firm despite of low business activity. It seems that price will remain firm in 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. The Karachi Cotton Association (KCA) spot rates were firm at previous level of Rs8,650 per maund.
• 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 8400 to Rs 8900 per maund (37.32 Kgs), while the lint prices from Punjab reportedly ranged from Rs 8300 to Rs 8900 per maund. Overall deals were made between the range of USC 77~82 Lbs. (8,300~8,900/ maund).

New York Cotton Futures:

• New York Cotton futures opens with lower levels on Monday as compare to previous week’s closing figures.
• NYCF further dropped in next two sessions, while recovered in next session and again dropped on closing, hence closed on positive side by the end of the week.

At last day of the week, DEC 2018 closed at 78.79 with upsurge of 162 points.

At last day of the week, MARCH 2019 closed at 80.31 with rose of 165 points.

At last day of the week, MAY 2019 closed at 81.56 with increase of 182 points.

Liverpool Index:

A was opened at 87.75 with higher level from previous week’s closing figure.

• In this week Index “A” showed downward trend in this week and closed on negative side.
• At last day of the week, LPI “A” closed at 86.40 with decrease of 135 point as of opening figure of the week.

Crude Oil:

Crude Oil prices opened at USD 67.04 with lower level as compared to last week closing figures.

• In this week crude oil prices showed negative trend in whole week and closed on negative side at the end of week.
• In last day of the week, Crude Oil price closed at USD 63.14 with decrease of USD 3.90 cents as of opening figure of week.

Pakistan Currency Exchange Rates

• In last week values of Pak rupee showed slight recovery against US Dollar’s other major currencies are also showed mix trend in both Interbank and open markets.
• At the end of week, Euro closed on a positive note with figure of 1.14 and British Pound also closed on positive note with figure 1.30 against USD.

Local Yarn:

• Local yarn market remained under sale pressure and limited inquiries were floated in market. Mills were extremely resisting to sell below a certain yarn price as raw material cost doesn’t allow them to sell yarn on such loss. Most of counts are available in ready stock with mill and they have day to day sale coverage.
• PSF price dropped by Rs.5/kg on 29^th Oct 2018 in domestic market by Ibrahim Fiber. Crude oil, PTA, MEG prices remained soft during this week and import polyester price dropped in China by week ended which may become reason to drop more polyester price in domestic market.
• 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 under sluggish business activity as customers are still indecisive about future sales. Most of the customers are of the opinion that market still have tendency to drop down further. Hence, they are placing limited quantity orders just to avoid any shortage of yarn stocks with them.
• On the other hand, suppliers are already started losing money by selling on current prices. Reason being that cotton prices are still firm with slight upward sentiments whereas yarn ‘selling’ prices are causing them losses.
• In coming days, situation seems to remain under the same sentiment as we might not see any aggressive buying from buyers.

Other Markets:

• In Far Eastern market, Korean customers remained quiet and inactive as per routine. No considerable business was reported. From Hong Kong market, customers were rechecking the prices for previous weeks with open inquires. In many cases they have changed their bid prices more than two times.
• Spinners tried their best to give very rock bottom prices to attain the orders but decision have not been made yet. It is expected that traders will book good quantity of double yarns in upcoming days. Overall Hong Kong market remained better in term of inquiries.
• European Market remained inactive and dull, very nominal activity was observed. Most of the buyers were biding extremely low prices. Only those suppliers who were under tremendous pressure of selling were able to book some deals. However, prices were significantly low in those finalized orders. No, bulk activity was noticed.
• Most of the suppliers, who were counting on Turkish market for the double yarns, they remained in selling pressure due to less demand from this market.

Local Fabric:

• Local fabric market remained steady and firm during most of the week but bids weavers reduced their asking and confirmed orders at reduced price levels for both narrow and wider width fabrics.
• Weavers are booked till end December’18 for narrow width and early January’19 for wider width and offering onward deliveries.

Local fabric prices of regular items are as follows:

20×16/128×60=63”at USD 1.14 to 1.16 per yard, 16×12/108×56=63” in range of USD 1.23 to 1.25 per yard and 20×20/108×58=63” was sold in range of USD 0.94 to 0.96 per yard based on ex mills.

Export Fabric:

• Week started with aggressive inquiries from Far Eastern markets. Korean customers have exchanged good number of program-based inquiries which were booked with their selected suppliers for 2~3 months. Chinese customers have sent limited inquiries resultant limited buying during the week. Bangladesh, Vietnam, Thailand, Indonesia markets remained aside of buying however Japanese customers have booked some quantities.
• Asking prices remained stable however suppliers have booked orders against reasonable target prices as yarn suppliers were also interested to have some counter bids to accept. Suppliers have good sales coverage as they are now offering 60 days lead time. Good suppliers are booked till end of Dec and offering early Jan onward deliveries whereas average suppliers are booked till mid of Dec and offering end Dec onward deliveries.

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

20×16/128×60=63”, in range of 1.14 to 1.16 per yd, 16×12/108×56=63” between USD 1.25 to 1.27 per yd and 20×20/108×5863” in range of USD 0.98 to 1.00 per yd based on CNF Far Eastern ports.

• European customers have exchanged good number of inquiries during the week under review. Germany, Italy and Spanish customers have booked decent quantities both in narrow and wider width fabric with their selected suppliers. Other European markets like Portugal, France and Belgium remain almost aside of buying.
• Work wear fabrics prices were soft by 1~2 % due to soft yarn prices in domestic market. Suppliers kept their prices stable during the week however they have booked orders at low targets after tough negotiation.
• Wider width suppliers are booked till mid of Jan and offering end Jan onward deliveries.
• USA buyers were also active as they have exchanged good number of inquiries resultant good booking both with airjet and Sulzer units. Suppliers are expecting good business activity in days to come hence they are closely watching the market.

Home Textiles:

• Home textile market was Firm in last week. Customer floated limited inquiries in the market. Few inquiries materialized and few were just for asking prices.
• European & USA markets buying was firm. Customers placed inquiries for orders for which they required urgent deliveries but they are still waiting for market improvements in order to get competitive prices.
• Suppliers have orders for up to December 2018 but still they needs more orders. Overall suppliers are in pressure to get new orders to fulfill their capacities to 100%. They are trying get more orders from different customers / markets and will offer good prices.
• 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.

Garments:

• Pakistani garment industry has observed an evolution during the past years as we have seen that industrialists who were earlier engaged in different textiles have ventured into finished apparel production. They have realized that profitability builds up with each process.
• Current week witnessed a normal level of order placements. Normally factories have offered three months lead time from order placements. Current available deliveries would be from January 2019 onward depending upon the order size and article design.
• A wave of interest from world class brands was also observed after the new Government’s announcement in increasing exports and making healthy changes in textile sector’s policy. Better compliances and sustainable product and production options in factories and have been one major factor for getting interest of different buyers across the globe.

Going Forward:

• In local cotton market according to PCGA report, we will not meet the target of cotton crop and as per the report 77,06,331 bales reached with ginners, which is comparatively less at 5.26% from last year Figures indicate that in coming days prices will increase speedily, though they remained firm previous week.
• 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 price level.
• In export yarn overall, a weak sentiment has been noticed from all regions. It is expected that November will remain slow in term of yarn business. The China and USA trade war is creating instability in the regions and this has affected Chinese exports seriously. We might see some positive outcome in days to come as now, China and USA have started dialogues.
• There is new optimism that local fabric market may ease down in coming weeks as yarn market could not sustain the pressure and are ready to negotiate offered yarn rates from the weavers due to their piling stocks.
• In export fabric market good trading activity was observed both in Far Eastern and European markets as they have exchanged good inquiries and placed decent bookings. Asking prices by the suppliers were stable during the week however soft yarn prices by 1~2% helped them to accept little bit low targets. Suppliers are expecting goods business activity in coming days as well.
• In Home Textiles market overall market condition was firm and business activity was normal. keeping in view last year’s activities in month of November, business placement always slow down during this time and suppliers are in pressure to fulfill their capacities, so suppliers are offering good prices to capture business. It is suggested to buyers that they should place new orders to get competitive rates for their upcoming requirements.
• In garment sector many of the factories have started their expansion programs as they are forecasting better volumes in future. Dialogues for next year’s bookings are yet to start aggressively as teams have been engaged on Christmas and New Year preparation. Sales figures on these occasions will determine a roadmap for future. The situation will reveal the strengths, challenges as well as opportunities coming in our way next year.