Market Report – Pakistan 3rd December 2018

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Local Cotton Highlights:

• Last week in local cotton market low turnover has been witnessed. Slow buying by the domestic mills is keeping ready business on a weak footing. Needy buyers took a part in fresh buying on small quantities, leading buyers were kept on sideline and didn’t make big deals.
• Quality of cotton is not available easily, ginners were trying to save fine type cotton to gain profit in days to come, therefore activity now a days is at slower pace. Ginner’s asking was on a higher side, this pushed the buyers away from their planned procurements. Business these days is materializing on low grade cotton and prime cotton has been held by ginners, expecting more profit in days to come. Crop of Pakistan will be over soon therefore ginners are in firm position.
• The Karachi Cotton Association (KCA) spot rates dropped in this week from 8,800 to level of Rs8,650 per maund. Internationally prices showed soft trend, NFYC also showed negative trend and China’s cotton is also on a lower side. Indian cotton 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 8300 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 higher levels on Monday as compared to previous week’s closing figures.
• NYCF in this week showed mix trend and moved on both ways, hence closed on positive side by the end of the week.

At last day of the week, DEC 2018 closed at 77.16 with lower of 24 points.

At last day of the week, MARCH 2019 closed at 78.91 with rose of 33 points.

At last day of the week, MAY 2019 closed at 79.95 with increase of 20 points.

Liverpool Index:

A was opened at 86.75 with same level from previous week’s closing figure.

• In this week Index “A” showed mix sentiment and moved on both sides. hence, closed on positive side.
• At last day of the week, LPI “A” closed at 86.80 with increase of 5 point as of opening figure of the week.

Crude Oil:

Crude Oil prices opened at USD 51.63 with upper level as compared to last week closing figures.

• In this week crude oil prices dropped in next session and took jump in next session, 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 50.93 with decrease of USD 0.70 cents as of opening figure of week.

Pakistan Currency Exchange Rates

In last week values of Pak rupee showed stability, while sharply dropped in last working day of week against US Dollar and 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 1.14 and British Pound closed on negative note with figure 1.28 against USD.

Local Yarn:

• Prices in asking remained stable and business finalization remained slow in local market during the week ended. More supply is the reason for pressure on prices but “free fall drop” was stopped due to cash loss on selling at this price by major mills. Local demand was there and business materialized as per the need of weavers and finishers.
• PSF price remained stable in domestic market by Ibrahim Fiber during last week ended. Crude oil, PTA, prices dropped but MEG prices were soft in International market during this week and China polyester price was dropped. It is expected that price of polyester in domestic market will settle according to US $ against Pak rupee.
• Faisalabad trading market remained stable and slow due to cash shortage in the market and specific counts buying was seen especially for 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 market remained slow despite of limited sale for another week in a row. Customers are only looking for limited quantities where they get prompt shipment at their required prices. This week’s prices have shown further decline to almost 1% as compared to last week. It seems that market will remain under pressure for upcoming week because some mills are carrying stocks with them and they are trying to dispose them off, even on lower prices to get the funds. Moreover, Chinese customer are now holding shipments by 20^th December onward till mid-January due to their upcoming holidays.

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 week’s open inquires. In many cases they have changed their bid prices many times. Spinners tried their best to give very rock bottom prices to attain the orders, but decision has 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, 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 were remained in selling pressure due to less demand from this market.

Local Fabric:

• In last week under review the local fabric market opened in quiet tone and gradually further slowed down towards the end of the week. Prices remained firm throughout the week and limited activity reported in the market against limited number of inquiries received. Weavers are offering mid-January delivery for narrow width and end January for wider width fabrics.

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:

• Overall good business activity was seen from Far Eastern and Asian markets till mid of the week however the week closed with dull activity. Limited quantity of orders were booked for basic items at market price however news about the sudden rise of US dollar 7~8% against the Pak rupee towards end of the week, has put everything on hold for the time being.
• Suppliers had good order positions earlier because of which they are not in sales pressure however current situation about the currency devaluation against US.dollar will take some days to settle down the market and then customers / suppliers will be in a position to take new buying / selling positions.
• Currently good suppliers are booked till end of Jan and offering early Feb onward deliveries whereas average suppliers are booked till mid of Jan and offering end Jan onward deliveries.
• It is expected that prices will remain stable in coming days and business activity 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.

• Good number of inquiries were exchanged from Italy, Portugal and German customers however limited orders were finalized both in narrow and wider width. USA buyers have sent inquiries aggressively resultant good booking in cotton, CVC in T180~ 250. Wider width suppliers also got orders and have extended their sales further. They are now booked till mid of Feb and offering end Feb onward deliveries.

Home Textiles:

• Home textile market has been slow in last week. Customers floated limited inquiries in the market & Maturity of business was limited.
• USA Market was better in last week, customers floated the inquiries and placed orders for new designs and for replenishment of running collections. European market buying was slow. Customers placed limited orders which were usually required by them on urgent basis.
• Home textile article prices were firm and we did not see any significant change in prices. Suppliers were offering same prices as they were quoting last weeks. So, keeping in view current prices and market situation it seems that prices will remain firm in upcoming weeks and there will be no significant change in prices. So as per forecast prices trends will be firm and will not increase or decrease in coming weeks.
• Suppliers have orders up to January, 2019 but still they are under sales pressure to fulfill their capacities 100% they are trying get more orders from different customers / markets, even to full fill their capacities 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 textile apparel industry is finding big time attraction to take leading role in establishing the South Asian region as strong contender after China. In year 2019 and days to come, there would be harsh competition between regional contenders within the sphere of apparel manufacturing.
• Pakistan is looking forward to take bold initiatives to mark its signature in the regional apparel arena by building the competitive edge over “Value” as oppose to “Volume”. With the consistent performance in earlier years, the industry has brought the change with the introduction of innovative technology, wearable electronics, eco-friendly fabrics to further strengthen the areas of design management, inventory management and product life cycle management.
• Pakistan being manufacturing facility to many world-renowned brands and moving consistently towards digitization through e-commerce, e-business and virtual business, which enables a direct link to global market which operates in the age of digital presence.

Going Forward:

• In local yarn market it is expected that market will be determined according to US dollar against Pak Rupee and market will remain under sale pressure till exports are not in stream lined. Further trends of yarn will be according to demand and supply of different counts which will lead price levels.
• In export yarn market for China Overall market was under pressure and customers are not showing interest in bulk buying, hence price will remain in current level or might show further with decline in coming days. For other markets a weak sentiment was noticed. November last week closed with very less activity.
• The local fabric market is in shock due to sudden fall of pak rupee which will push prices to move upward in coming week.
• In export fabric market business activity remained good during the week both from Far eastern, Europe and USA markets. Prices remained stable without change because of stable raw material prices. It is forecasted that business activity may remain average in coming days.
• In home textiles market business activity was firm as compared to the last 2 weeks in the market but hopefully in coming days customers will make decisions to buy in bulk quantities because as per forecast prices will be remain on current level in coming weeks. Right time for buyers to place future orders.
• In garment industry with all the market dynamics, beginning of new year is expected to bring healthy placements.