Market Report – Pakistan 10th December 2018

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Local Cotton Highlights:

• Last week in local cotton market, business activity couldn’t pick up with its usual momentum and remained on slow paced. Only needy buyers showed interest in buying and leading buyers were kept on sidelines. Leading mills have already covered their stocks and balance is being imported from other countries so activity in the local cotton was moderate.
• Ginners were quite firm on asking on quality lint’s in anticipation of better profit in days to come. As local cotton arrival is nearing its end in coming couple of weeks and rising trend of US$ is also putting impact therefore, they showed firmness.
• During the current season, (August 2018/July 2019), Pakistan is expected to produce about 10.5 million bales cotton (155 Kgs) which will create a shortage. Domestic mills will have to import between 4 to 4.5 million bales of cotton. PCGA issued fortnightly report of cotton arrival, showing Arrival 93,66,938 bales which is comparatively less at 7.55% from last year at this same time.
• After the meeting between leaders of USA & CHINA the custom duty issue has been halted for three months giving hope to around the world. NYCF also showed improvement after the G20 summit. NYCF may increase in days to come if China makes a deals of USA cotton.
• Ready cotton prices showed a steady stance in this week in local cotton market due to the less activity, prime cotton asking remained on a higher side, while low grade cotton showed softness in term of prices. The Karachi Cotton Association (KCA) spot rate gained in this week from 8,700 to level of Rs8,800 per maund.
• 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 74~81 Lbs. (8,400~9,150/ maund).

New York Cotton Futures:

•  New York Cotton futures opened on higher levels on Monday as compare 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, MARCH 2019 closed at 80.23 with rose of 28 points.

At last day of the week, MAY 2019 closed at 81.17 with increase of 13 points.

At last day of the week, JULY 2019 closed at 81.73 with lower of 30 points.

Liverpool Index:

A was opened at 86.55 with Lower level from previous week’s closing figure.

• In this week Index “A” showed upward trend in this week and closed on positive side.
• At last day of the week, LPI “A” closed at 89.20 with increase of 265 point as of opening figure of the week.

Crude Oil:

Crude Oil prices opened at USD 52.95 with upper level as compared to last week closing figures.

• In this week crude oil prices showed mix trend and closed on negative side at the end of week.
• In last day of the week, Crude Oil price closed at USD 52.61 with decrease of USD 0.34 cents as of opening figure of week.

Pakistan Currency Exchange Rates

 In last week values of Pak rupee depreciated 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 1.14 and British Pound closed on negative note with figure 1.27 against USD.

Local Yarn:

• Local yarn market increased by Rs. 6~8/lbs in cotton yarn count and 4~5/lbs in pc yarn during this week after devaluation in Pak rupee. Good number of enquiries were floated in market and sizeable volume finalized during this week. Most of mills sold good quantities in domestic market and extended their sale coverage position.
• PSF prices remained stable in domestic market by Ibrahim Fiber during last week ended. Crude oil prices remained stable, PTA, MEG prices increased in International market during this week and China polyester price was jumped up by end of this week. It is expected that price of polyester in domestic market will settle according to US $ against Pak rupee.
• Faisalabad trading market was active and fine counts prices were increased and good sale were reported. Prices was also increase by 5~6% and trader remained active in buying.

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

Export Yarn:

China:

• Export yarn China market remained under nominal business activity as customers showed limited activity by confirming orders with prompt shipments. Most of the customers are still expecting correction in prices as there have been no positive development after the meeting between officials of USA and China. For few days after the meeting, stake holders were optimistic that things will get better and Chinese currency against USD has started appreciating. However, mid-week onwards, things were back to the previous levels as currency showed devaluation as well as cotton prices dropped.
• Hence, things are not moving in positive direction. On the other hand, Pakistan market is getting settled now after handsome quantity buying from all the customers in Pakistan from domestic mills. Hence, now, suppliers are firm due to good sales coverage and upward cotton prices in domestic market.

 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 based inquires but none of deals were seen as being finalized.
• European Markets remained active and floated good number of inquiries during the start of 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 compare to rest of the markets. Most of the yarn counts are competitive from India as seen overall.

 Local Fabric:

•  The local fabric market unexpectedly entered into positive territory which surprised the main market players; therefore, last week closed with good activity though orders closed after tough negotiations at increased price level for both narrow and wider width fabrics.
• Weavers are booked for narrow width till 3^rd week Jan ~ ends Jan’19 and wider width looms are covered till end Jan/early Feb’18 and onward deliveries are available.

 Local fabric prices of regular items are as follows:

20×16/128×60=63”at USD 1.18 to 1.20 per yard, 16×12/108×56=63” in range of USD 1.25 to 1.27 per yard and 20×20/108×58=63” was sold in range of USD 0.99 to 1.01 per yard based on ex mills.

Export Fabric:

• Far Eastern markets were active during the week as good number of inquiries were exchanged in the market. Good bookings were observed for basic items from Korea, China, Japan, Vietnam, Indonesia and Bangladesh. Prices were stable due to stable raw material prices however suppliers have booked orders with comparatively less prices than last orders due to advantage of currency which is depreciated against US. Dollar about 4~5%. Suppliers have good booking position as they are booked for next 50~60 days. Currently good suppliers are offering end Feb onward deliveries whereas average suppliers are offering mid Jan onward deliveries. It is expected that business activity will remain good in coming days as there is good demand from all origins

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 their inquiries both in narrow and wider width aggressively resultant good booking with the customers. Suppliers received good orders from Germany, Italy, Spain, Portugal. USA buyers were also active during the week as they have exchanged good order quantities in T-180 ~ T-300.
• Wider width suppliers have extended their booking further and now they are comfortably booked till end of Feb and offering March onward deliveries. Interestingly, customers are ready to place March shipment orders with their selected suppliers for their program-based orders. Suppliers are expecting good business activity before Christmas holidays.

Home Textiles:

• Home textile market was Slow in last week. Customer floated good inquiries in the market but maturity of business was limited.
• USA Market was firm in last week, customer floated limited inquiries and customer placed few orders of running Collections. European markets buying was slow as well. Customers placed limited orders which they required on urgent basis. As per forecast market will remain slow in December due to upcoming Heimtextil fair in Germany.
• Home textile articles prices suddenly changed due to devaluation of Pakistani currency. Due to currency devaluation yarn price has gone upwards which has affected the Home textile articles prices. Suppliers were offering 3 to 4% increased prices as compared to the last weeks. So as per forecast prices will be on higher sides in upcoming Weeks.
• Suppliers have orders up to January, 2019 but still they are under sales pressure to fulfill their capacities at 100% they are trying get more orders from different customers / markets, even to full fill their capacities suppliers are offering last week 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 felt positive vibes in Apparel Industry during the past. Garments industry is dealing with many opportunities and looking forward a huge business wave coming this way.
• Not only for Apparels but many big brands are booking fabrics from Pakistan too. A strong analytical drive is required to strategize this trend, APTMA (All Pakistan textile manufacturing association) is to play very vital role in this situation.
• Heaving knitted fabric bookings may lead to fabric scarcity and eventually the raw material price increase. All garment makers are showing huge concern on this situation.
• Pakistan would still be a strong source base for fleeces and heavy weight fabric garments. Current lead times are running around 3 months minimum time.

Going Forward:

• In local yarn market it is expected that the market will be determined according to US dollar against Pak Rupee and market will stable according to demand. Further trends of yarn will be according to demand and supply of different counts which will lead price level.
• In export yarn China market, it is expected that prices will remain stable and business activity will start to resume after couple of weeks. We might see good order placements from customer’s side in the month of December. In other markets However, it is expected that rates will start getting firm by the end of this month.
• In local fabric market the dollar fluctuation has put all stake holders clueless and it will remain primary driver for coming weeks as well.
• In export fabric market healthy business was witnessed both with Far Eastern, Asian, European and USA customers. Suppliers are comfortably booked in narrow and wider width for next 60~80 days respectively. It is expected that business activity will remain good in coming days from all origins and prices may remain stable.
• In home textiles market overall market has been slow and business activity was not seen good as compared to the last 2 weeks in the market but hopefully in coming days market will be stable. So keeping in view current situation prices will be slightly on upside. So, it is suggested, it would be better for customers to place the new orders in next week to get the competitive prices for future requirements.
• Garment sector going through reasonable business developments which are attracting buyers to come in Pakistan and place orders. Hence, we might see positive developments in days to come.