Market Report – Pakistan 26th November 2018

Local Cotton Highlights:

• In this week cotton activity remained on modest pace, needy buyers were busy in buying, hence leading buyers were not interested to make big deals due to lack of market moving factors. By the mid of week public holiday in Pakistan due to a religious observance, also made steady tone of domestic market. Overall trading turnover was low, continuing and regular imports of cotton into Pakistan, both to cover the insufficient domestic output of lint as well as to obtain better quality cotton. It seems that the business circles were reluctant in making new deals despite short crop news.
• It is believed that Pakistan will harvest about 10.5 million bales (155 Kgs) of cotton during the current season (August 2018/July 2019). Due to the shortage of cotton prices may rise in days to come.
• Despite of the slow activity, ginners remained firm and are expecting further rise in domestic market. They have held the prime cotton quality lint with them in expectations of more profit and they are offering in range of 9300~9400\bale, so for the time being leading buyers are in a waiting mode and currently doesn’t seem to be interested to buy in this range.
• The Economic Coordination Committee (ECC) of the Cabinet has allowed import of cotton from Afghanistan/ Central Asian states via land route through Torkham border with the objective to bridge demand and supply gap of local textile sector. Import cotton prices are in range of 83~84 cents of good quality cotton, hence mills are interested to import cotton from this side.
• PCGA issued report of cotton arrival (crop 2018/2019) 86,71,596 bales, which is comparatively less around 7.34% from the last year at this time. Contributed region wise as Total from Punjab@4,985,116, from Sindh@3,584,707, from Baluchistan@101,773.
• Although business volume was low, prices were remained firm and stable. Low quality lint prices were soft and ginner sold on low levels. It seems that short quality lint and crop size stabilizing the local cotton prices, once leading buyers will come in buying, prices will jump up in coming days. Import prices will also be not feasible for spinners from INDIA due to the high level of dollar in Pakistan and in India their currency has appreciated around 4%. The Karachi Cotton Association (KCA) spot rates remained firm at level of Rs8,800 per maund. Internationally prices showed soft trend , NFYC showing negative trend and China’s cotton futures fell to their lowest since May 2016. India cotton also showed downward trend as their new crop arrival has been started. If the Indian prices will drop further , Pakistani spinners may take interest to buy bulk cotton from india.
• Prices of seed cotton (Kapas/Phutti) in Sindh were in range from Rs 3300 to Rs 4000 per 40 Kgs, while in the Punjab the seed cotton prices reportedly ranged from Rs 3500 to Rs 4100 per 40 Kgs in local market based on quality . 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 8500 to Rs 9150 per maund. Overall deals were made between the range of USC 77~83 Lbs. (8,400~9,150/ 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 session and then recovered in next day, while dropped again on closing, hence closed on negative side by the end of the week.

At last day of the week, DEC 2018 closed at 74.92 with lower of 96 points.

At last day of the week, MARCH 2019 closed at 77.22 with rose of 83 points.

At last day of the week, MAY 2019 closed at 78.49 with loss of 83 points.

Liverpool Index:

A was opened at 86.30 with same level from previous week’s closing figure.

• In this week Index “A” showed downward trend in this week, while recovered on closing and closed on positive side.
• At last day of the week, LPI “A” closed at 86.75 with increase of 45 point as of opening figure of the week.

Crude Oil:

Crude Oil prices opened at USD 56.76 with slight upper level as compared to last week closing figures.

• In this week crude oil prices dropped in next session and took jump, later again dropped on closing and closed on negative side at the end of week.
• In last day of the week, Crude Oil price closed at USD 50.42 with decrease of USD 6.34 cents as of opening figure of week.

Pakistan Currency Exchange Rates

• In last week values of Pak rupee showed stability against US Dollar’s, other major currencies showed mix trend in both Interbank and open markets.
• At the end of week, Euro closed on a positive note with figure of 1.13 and British Pound closed on negative note with figure 1.28 against USD

Local Yarn:

• Local yarn market remained same in calling prices of yarn during this week and business finalized on lower side against customer bids. In Cotton yarn coarse counts export is slow and domestic market over supply caused more pressure on mills, where as in pc/cvc based mill, they have a slight comfortable position in stock and sale.
• PSF price remained stable in domestic market by Ibrahim Fiber during last week ended. Crude oil, PTA, prices dropped but MEG prices was firm in international market during this week and import polyester price was stable in China by week ended.it is expected that price of polyester in domestic market will remain same or minor drop by upcoming week.
• Faisalabad trading market remained stable and specific count buying was seen of fine count in this week. Other counts demand remained average and slow trade reported.

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 for another week in a row. Customers are buying minimal quantities only for prompt shipments. 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.
• In addition to that, mills are seller for December shipments whereas now, customers are showing interest to book January shipments to avoid keeping stocks during holidays. 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:

• Limited 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 small quantities, however they are asking for the prompt deliveries due to which very few orders were finalized. Traders were showing less interest in booking good quantity. Overall Hong Kong market slightly picked up as compared to last week.
• European Market remained active as compared to last two weeks 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 needy mills.

Local Fabric:

• The local fabric market showed cautious behavior throughout the week against limited inquires floated by local finishers. Weavers showed strong resistance in price negotiations owing to the reason, they have comfortable booking in-hand for 50-70 days for both narrow and wider width fabrics respectively.
• Prices remained firm and stable throughout the week and limited business reported in the market.

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:

• This week started with good number of inquiries from Far Eastern markets however the week closed with slow activity. Korea, China, Bangladesh, Vietnam, Thailand and Indonesian customers have exchanged good number of inquiries resultant good order booking with their selected suppliers at better prices. Current price level is logical for the customers hence they are placing their required quantity orders. Asking prices were stable during the week however negotiation margin was available by 2~3% depending on the quality / construction. Suppliers are expecting that market direction will drive after mid of next week when Chinese and USA president have dialogue on their trade dispute so customers are also monitoring the market sentiment closely. Almost all of the suppliers are booked till end of Dec and offering early ~ mid Jan 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 1.24 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.

• European customers have sent good number of inquiries during the week both in narrow and wider width. Good booking was observed from Portugal, Germany and Italian customers. Some good quantity of orders is under discussion from Spain, France and Belgium which hopefully will finalize during next week. USA buyers were active as they were discussing T-180 ~ T250 and booked their required quantities.
• Wider width suppliers have also got good orders during the week. Currently good suppliers of wider width are booked till March and now holding for next offers however some of the average suppliers are booked till mid of Feb and offering end Feb onward deliveries.

Home Textiles:

• Home textile market was firm in last week. Customer floated limited inquiries in the market & Maturity of business was limited. USA Market was active in last week, customer placed orders for spring season and for replenishment of running collections. European market buying was firm. Customers placed limited orders which they required in urgent basis to keep their sales continued.
• Home textile articles price was firm in last week and not many changes seen in prices. Suppliers were offering same prices as they were quoting in 2nd week of November. Suppliers have orders up to January, 2019 but still they are under sales pressure to fulfill their capacities at 100% they are trying to get more orders from different customers / markets, suppliers are offering very sharp prices to capture bulk 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:

• Pakistan has observed the value of its textile and apparel going up by approximately one percent during first quarter of the year with garment industry taking a leap on the overall results.
• Numbers from the PBS (Pakistan’s Bureau of Statistics) show Pakistan’s textile and readymade garments exports soars up by 0.86% in the July to September period to USD 3.28billion from USD 3.26billion last year.
• Separately, ready-made garment exports dropped by 1.5% to USD 599.3million from USD 608.7million during last year, data told from PBS.

Going Forward:

• In local yarn market it is expected that market will be remaine under sale pressure till exports are not stream lined. Further trend of yarn will be according to demand and supply of different counts which will lead price level.
• In export yarn China, market will remain under pressure as supply is more in response to demand. In other markets it is expected that market will remain slow, buyer will prefer to buy in chunks instead of placing extended programs.
• In local fabric market it is expected to trade in negative territory for coming weeks.
• In export fabric market healthy business activity was seen during the week from almost all sectors including Korea, China, Bangladesh and Vietnam. European and USA buyers have also booked both in narrow and wider width fabric for Jan ~ March shipments. Prices were stable during the week however there was negotiation margin of 2~3% hence suppliers booked good quantity of orders. The market situation will be clearer from next mid-week onwards, either it will remain stable in current position or go up because it has touched bottom level already.
• In home textiles market Overall market was firm and business activity was slightly good as compared to the last 2 weeks in the market but hopefully in coming days customer will make decisions to buy in bulk quantities because as per forecast prices will be remain on current level 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 market current week under review has shown a slow movement in Pakistan apparel industry in terms of inquiry floating and order finalization. Customers are eyeing towards post-Christmas scenario for next year’s placements.