Market Report – Pakistan 19th November 2018

Local Cotton Highlights:

• Slow activity was witnessed on a subdued cotton market in this week. Most of the leading buyers remained on sidelines in the absence of motivating factors. Whereas buyers with urgent needs were in the market to cover their current requirements. Cotton buyers were willing to see dollar to further gain against the local currency, which will give a boost to textile items. Local cotton market was also influenced by the global track which was soft in this week and it looks that international trend may continue in the short term. Hence, kind of uncertainty prevailed in the local cotton market in the absence of fresh leads. Traders were expecting some upset due to persistent fall in business activity.
• Ginners remained firm on prices as they were expecting that prices will rise further due to the less crop in this year and quality lint will be short in a day to come.
• Despite of the low business activity, prices didn’t show sharp decline, although prices showed slight softness and traders bought cotton with difference of 50~100/maund in last week. It seems that short quality lint and crop size stabilizing the local cotton prices, once leading buyers will start buying, it seems that prices will jump up in coming days. Import prices will also be not feasible for spinners due to the high level of dollar. The Karachi Cotton Association (KCA) spot rates decreased from 8900 to level at Rs8,800 per maund. Internationally prices showed soft trend and there was no major demand of cotton.
• Prices of seed cotton (Kapas/Phutti) in Sindh were in range from Rs 3800 to Rs 4100 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 9000 per maund (37.32 Kgs), while the lint prices from Punjab reportedly ranged from Rs 8500 to Rs 9050 per maund. Overall deals were made between the range of USC 76~82 Lbs. (8,400~9,050/ 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 showed mix trend in whole week, hence closed on negative side by the end of last week.

At last day of the week, DEC 2018 closed at 76.12 with lower of 26 points.

At last day of the week, MARCH 2019 closed at 78.29 with rose of 4 points.

At last day of the week, MAY 2019 closed at 79.55 with loss of 4 points.

Liverpool Index:

A was opened at 87.40 with lower 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 86.30 with decrease of 110 point as of opening figure of the week.

Crude Oil:

Crude Oil prices opened at USD 59.93 with lower level as compared to last week closing figures.

• Last week week crude oil prices dropped in next session and then showed slight rising trend in whole week, although closed on negative side at the end of week.
• In last day of the week, Crude Oil price closed at USD 56.46 with decrease of USD 3.47 cents as of opening figure of week.

Pakistan Currency Exchange Rates

• In last week values of Pak rupee slightly dropped 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 positive note with figure of 1.14 and British Pound closed on negative note with figure 1.28 against USD.

Local Yarn:

• Local yarn market remained under sale pressure due to excessive supply of yarn in local market. Asking prices from mills remained same but due to stock pressure and short of funds some mills sold against bid near their asking price. On the other hand, weavers have orders in hand and they held their procurements and bought much needed yarn only.
• PSF price dropped by Rs.10/kg on 12^th Nov 2018 in domestic market by Ibrahim Fiber. Crude oil, PTA, MEG prices dropped in International market 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 by upcoming week.
• Faisalabad trading market was active for fine count yarns due to season demand. PC and PV yarn remained under sale pressure and limited trade being made during last week.

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

Export Yarn:

China:

• Export yarn markets showed another week with lackluster business activity. Customers are still indecisive about future buying due to uncertain market conditions.
• On the other hand suppliers are of the opinion that selling yarn at current prices is huge loss and if situation prevailed for next couple of months, they will start cutting their production or might close production as well.
• Only hope in betterment of textile industry is meeting between Chinese and US president meeting in end of November. If their dispute is resolved, we might see betterment in overall activity. In case of dialogue failure, things will get more worse than now.

Other Markets:

• In Far Eastern market, Korean customers remained quiet and inactive as per routine. No considerable business was reported. From Hong Kong’s market, customers were rechecking the prices for previous weeks open inquires. In many cases they have changed their bid prices more than two times but still no order was finalized. Spinners tried their best to give very rock bottom prices to attain the orders still decision has not been made yet.
• 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, the 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:

• In current week under review the local fabric market remained slow. Limited number of inquiries floated in the market and limited business materialization observed but at slightly reduced prices after tough negotiations.
• Weavers are comfortably booked till early January ~ mid January’19 and whereas buyers are insisting for end December delivery which weavers are unable to commit.

Local fabric prices of regular items are as follows:

20×16/128×60=63”at USD 1.17 to 1.19 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 0.98 to 1.00 per yard based on ex mills.

Export Fabric:

• Limited inquiries were exchanged by Far Eastern customers but no business was witnessed. Chinese, Vietnam, Bangladesh, Thailand and Indonesian customers have sent limited inquiries however no considerable buying was observed. This week went slow in business after remaining active last many weeks.
• Asking prices were stable during the week due to stable raw material prices. Suppliers had good booking during last couple of weeks when the market was very active hence, they are booked till end of Dec. Limited quantities are available for end Dec otherwise bulk deliveries are available only by mid of Jan. It is forecasted that fabric prices will remain stable in coming days and business activity also may remain slow.

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 1.24 to 1.26 per yd and 20×20/108×5863” in range of USD 0.94 to 0.96 per yd based on CNF Far Eastern ports.

• Comparatively less business activity was noticed from European markets. Limited inquiries were received from Germany, Portugal, Italy and Spain resultant average business was observed both in narrow and wider width.
• PSF prices further down by about 10% hence PC, CVC prices declined and work wear items became further competitive. Due to average business activity, wider width suppliers could not extend their sales hence they are still offering end Jan onward deliveries.
• USA buyers have sent limited inquiries in T-180~T250 which are under discussion and expected to finalize during next week. Suppliers are expecting good business activity from Europe and USA in coming days.

Home Textiles:

• Home textile market was slow in last week. Customer floated limited inquiries in the market & few inquiries were placed just to check prices trends. Maturity of business was limited as compared to the last 3 weeks.
• USA Market was slow in last week, customer placed limited orders. Majority of orders placed were for running collections. European market buying was firm. Customers placed limited orders which they required on urgent basis to keep their supply programs continued.
• Improvement in polyester yarn prices impacted by resulting in reduced home textile article prices in last week and prices decreased approximately 3-4% especially in cotton / Polyester articles. Current prices are attractive for customer.
• Suppliers have orders up to December / Mid-January, 2019 but still they need more orders. To fulfill their capacities at 100% they are trying get more orders from different customers / markets, even to get the orders suppliers are capturing deals at breakeven cost. 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.

Garments:

• Pakistan produces apparel of various patterns and styles, of the latest fashions and quality. The industry is adequately equipped to produce latest fashions to suit tastes and needs in any part of the world.
• Leading Pakistani designers, apparel manufacturers and exporters regularly display their designs and products round the world at international fairs and exhibitions and in trade centers.
• Recent promising part is that The Senior Vice Chairman of PRGMEA (Pakistan Ready Made Garments and Manufacturers Association) said that it is encouraging that the government has identified the textile sector as a key priority and is endeavoring to set the right policies and incentives that encourage private sector investment in value addition and expansion in a bid to gain wider access to international markets.
• The Ministry of Commerce and Textile Industry is also offering multiple training courses in different fields to enhance the capabilities of its workers to make the sector competitive.

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 price level.
• In export yarn market is expected to remain under pressure for next couple of weeks as demand form domestic and international markets is quite slow and supply is surplus. Overall weak sentiment was noticed from all the regions. It is expected that November will remain slow in term of yarn business.
• Local fabric market faces uncertainty as tensions over US-China trade relations resurfaced. Therefore, local fabric market is expected to move in a band with minor trading fluctuations.
• In export fabric market the week went slow comparatively as limited inquiries were exchanged by Far Eastern, Europe and USA resultant limited buying was observed. Prices remained stable and expected to remain in the same range in coming days. It is forecasted that there will be good business from Europe and USA in coming weeks.
• In Home Textiles overall market was slow and business activity was firm, but hopefully in coming days customer will make decisions to buy in bulk quantities because as per forecast prices will remain firm in coming weeks. So, keeping in view current market situation, it would be better for customers to place the new orders to get the competitive prices for future requirements.
• In Garments Industry with the increasing confidence of global buyers over a period of time, Pakistani apparel manufacturers will be a better choice for them in future and with the information of Inditex coming to Pakistan, this explains the future forecast of what global brands have in mind about shifting to Pakistan.