Market Report – Pakistan 12th November 2018

Local Cotton Highlights:

• Local cotton market activity was good in early last week and later activity dropped due to the shortage of the lint from the market. Cotton pickers were almost busy in Diwali celebrations, so the supply of seed cotton was disturbed. Hence, buyers were in buying mode to maintain their stocks. Rumors for the shortage of cotton crop of current season also created uncertainty among the spinners. Therefore, they are interested to maintain their stocks on the same current price levels.
• Prices during last week remained firm and maintained its level. There is no chance in days to come that prices will drop further. There is a general expectation that price may go up in coming days due to the shortage of crop and quality lint but this will be rare. Import prices will also not be feasible for spinners due to the high level of dollar. The Karachi Cotton Association (KCA) spot rates increased from 8750 at Rs8,800 per maund. Internationally prices showed soft trend and there was no major demand of cotton seen internationally.
• According to PCGA report, we will not meet the target of cotton crop. As per the report now 77,06,331 bales reached ginners which is less at around 400,000 comparatively from last year. It seems that arrival of cotton of the current crop will be around 10~10.5 Million. So there is a hype that has been created with spinners and buyers but in reality this isn’t the case.
• Prices of seed cotton (Kapas/Phutti) in Sindh were in range from Rs 3800 to Rs 4300 per 40 Kgs, while in the Punjab the seed cotton prices reportedly ranged from Rs 3800 to Rs 4200 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 9150 per maund (37.32 Kgs), while the lint prices from Punjab reportedly ranged from Rs 8500 to Rs 9150 per maund. Overall deals were made between the range of USC 78~84 Lbs. (8,400~9,150/ maund).

New York Cotton Futures:

• New York Cotton futures opened with lower levels on last Monday as compare to previous week’s closing figures.
• NYCF further dropped in next session, while recovered in its following session and again showed negative trend till closing, hence closed on negative side by the end of the week.

At last day of the week, DEC 2018 closed at 78.09 with lower of 78 points.

At last day of the week, MARCH 2019 closed at 79.86 with dropped of 48 points.

At last day of the week, MAY 2019 closed at 81.25 with lose of 38 points.

 Liverpool Index:

A was opened at 88.60 with higher level from previous week’s closing figure.

• In this week Index “A” showed downward trend in this week, while recovered on closing, hence, closed on negative side.
• At last day of the week, LPI “A” closed at 88.35 with decrease of 25 point as of opening figure of the week.

Crude Oil:

Crude Oil prices opened at USD 63.10 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 60.19 with decrease of USD 2.91 cents as of opening figure of week.

Pakistan Currency Exchange Rates

• In last week, values of Pak Rupee dropped against US Dollar’s and other major currencies also showed mix trend in both Interbank and open markets.
• At the end of the week, Euro closed on a negative note with figure of 1.13 and British Pound closed on positive note with figure 1.30 against USD.

Local Yarn:

• Local yarn market remained under sale pressure and limited business was finalized. Most of the spinners have ready deliveries in all counts and they are trying to sell immediately. Weaving demand due to oversupply of yarn remained under pressure.
• PSF price dropped by Rs.6/kg on 5^th Nov 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 have become a reason to drop more polyester prices in domestic market by upcoming weeks if US$ remains same.
• 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 news for decrease in fiber price.

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

Export Yarn:

China:

• Market remained slow for another week in a row. Customers have no confidence about future market and not taking any decision to book bulk quantities.
• Most of the customers are still expecting further decline in prices and not taking any further position. It seems that market sentiment will remain the same in coming couple of weeks.
• On the other hand, suppliers are in deep pressure due to high cotton prices and low yarn prices. On top of that, in upcoming weeks, there seems no positive sign of improvement in prices. This year, if situation remains the same, we might see closure of many mills as they can’t afford such heavy losses by buying cotton on high prices and sales of yarn with low levels.

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.
• As far as Hong Kong market is concerned, customers inquired for few and large volumes but none of deals were finalized.
• European Market remained active and floated good number of inquiries during the start of previous week. They were interested to place the orders but remained very reluctant to buy the bulks. So, despite of demand, no bulk business has been materialized but certainly this market behavior is better as compared to rest of the major markets.
• Turkish buyers remained silent, only few deals of double yarns reported on lower level of prices from the needy mills.

Local Fabric:

• In current week under review the local cotton market slowed down and limited orders confirmed at slightly increased price level in volatile market after tough negotiations. Orders confirmed with very tight delivery schedule of December.
• Weavers are booked till end December/early January for narrow and wider width fabrics respectively.

Local fabric prices of regular items are as follows:

20×16/128×60=63”at USD 1.12 to 1.14 per yard, 16×12/108×56=63” in range of USD 1.21 to 1.23 per yard and 20×20/108×58=63” was sold in range of USD 0.93 to 0.95 per yard based on ex mills.

Export Fabric:

• Bulk buying was observed by Far Eastern customers during the week where the suppliers were happy to see the activity after long time. Korean customers have booked their program-based orders as well as small orders with about 2% lower prices compared with the market prices however, suppliers accepted the same as a special case and just to keep active in Korean market.
• China, Japan and Vietnam have sent good number of inquiries resultant good business with their selected suppliers.
• Other markets like Bangladesh, Indonesia and Thailand were remained mixed with limited business activity.
• Asking prices towards end of the week were firm however suppliers were ready to negotiate reasonable customer target prices. Currently good suppliers are booked till early of Jan and offering mid Jan onward deliveries whereas average suppliers are booked till 3^rd week of Dec and offering end Dec ~ early Jan onward deliveries.
• It is expected that prices may remain firm in coming days due to short cotton crop this year. Overall suppliers have good sales position hence they have no sales pressure at the moment.

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 markets were active during the week under review. Suppliers have good orders from their regular customers in Germany, Italy, Spain and Portugal. Customers have booked both in narrow and wider width fabric.
• Workwear item prices were competitive after decrease of price in PSF in local market. It may further be competitive as buyers are expecting further decrease in PC, and CVC yarn prices due to decrease expected of PSF during next week.
• Prices for wider width fabric remained stable due to stable yarn prices. Wider width suppliers are comfortably booked till mid of Jan and offering end Jan ~ early Feb deliveries. Average number of inquiries were exchanged by USA buyers due to slow demand / activity in USA market.

Home Textiles:

• Home textile market has performed well last week. Customer floated inquiries in the market & maturity of business was better as compared to the last 3 weeks.
• USA Market was firm in last week, customer placed new orders for new designs and for some running collections for which sale went well. European buying was firm as well. Customers are placing the orders for upcoming seasons.
• Due to improvement in prices with them going 3-4% down, customers are placing new orders. Keeping in view current market situation it seems that prices will remain firm in upcoming weeks because Yarn prices are firm in the market.
• Suppliers have orders up to December, 2018 but still they are seeking for more orders. 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:

• Order situation in Pakistan apparel industry during the current week has been a bit slow. Suppliers/Manufacturers have tried to offer their best prices to customers by keeping their profit margins at minimum level to get the business.
• Factories have offered three months lead time from order placements.
• Prevailing sales pressure on raw material suppliers might compel them to lower their asking prices. This will result in reduced prices for apparel manufacturer to attract their customers’ interest for big volumes.

Going Forward:

• In local yarn the market is expected to 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 market the overall sentiment remained depressed and no improvement was observed. Prices are under pressure and customers are not placing bulk quantities on expectation of further drop in prices. It is expected that market will remain slow, buyers will prefer to buy in chunks instead of placing extended programs.
• In local fabric market as per the historical data it’s expected that there will be a slow down further. However, market will tend to maintain current level with slight fluctuations.
• In export fabric market it’s just another week that went well as good trading activity was seen both in Far Eastern and European markets however USA buyers were little bit slow as no major buying was witnessed during week. Fabric suppliers have good sales position hence they are not in pressure.
• In home textiles market overall situation is better and business activity has been good in the market. Hopefully in the coming days customer will make decisions to buy in bulk quantities because as per forecast prices will be remain firm in coming weeks. This is the ideal time for home textile buyer to place their orders.
• In garment industry overall market sentiment has been slow during the week. Volumetric orders will start coming after Christmas holidays after observing customers’ response.