Market Report – Pakistan 17th December 2018

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Local Cotton Highlights:

• Last week in local cotton market, trading activity did not maintain its healthy pace as the mills did not show much interest in fresh buying. Ginners’ also showed cautious attitudes towards selling aiming better profit margins in days to come.
• Cotton was down in the international markets. While in the local market prices remained steady and stable due to short projected output during the current season (August 2018/July 2019) where the total cotton output is projected at 10.5 million bales (155 Kgs). Domestic mills consumption is estimated to be about 14.5 million bales.
• Total arrivals during the current season till now are around 9.7 million bales. Mills have booked nearly 2.5 million bales of cotton in imports. Seed cotton for about another 800,000 to 900,000 bales are yet to arrive from the growers to the ginning factories.
• Ready cotton prices showed a steady stance during this week due to less activity, prime cotton asking remained on higher side, while low grade cotton showed softness in term of prices. The Karachi Cotton Association (KCA) spot rate gained during the 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 3400 to Rs 4000 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 8300 to Rs 9000 per maund (37.32 Kgs), while the lint prices from Punjab reportedly ranged from Rs 8500 to Rs 9100 per maund. Overall deals were made between the range of USC 73~80 Lbs. (8,300~9,100/ maund).

New York Cotton Futures:

•  New York Cotton futures opened on lower side on Monday as compare to previous week’s closing figures.
• NYCF rose in next day, then dropped in two consecutive sessions, while recovered slightly on closing, hence closed on negative side by the end of the week.

At last day of the week, MARCH 2019 closed at 79.60 with fall of 28 points.

At last day of the week, MAY 2019 closed at 80.67 with decrease of 22 points.

At last day of the week, JULY 2019 closed at 81.34 with lower of 12 points.

 Liverpool Index:

A was opened at 87.25 with Lower level from previous week’s closing figure.

• In this week Index “A” showed mix trend in this week and closed on positive side.
• At last day of the week, LPI “A” closed at 88.25 with increase of 100 point as of opening figure of the week.

Crude Oil:

Crude Oil prices opened at USD 51.00 with upper level as compared to last week closing figures.

• In this week crude oil prices showed mix trend and closed on positive side at the end of week.
• In last day of the week, Crude Oil price closed at USD 51.20 with increase of USD 0.20 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 negative note with figure of 1.13 and British Pound also closed on negative note with figure 1.26 against USD.

 Local Yarn:

•  Local yarn market remained stable and firm during this week prices being on the higher side. Good activity prevailed in domestic market. Most weavers covered yarn against their sold fabric orders and spinners came into comfortable sale position after last two weeks activity of slow.
• PSF price 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 remained stable 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 bullish in fine cotton yarn counts and massive sale reported at increased rates. Blended yarn prices also increased and good activity report.

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

 Export Yarn:

 China:

• Export yarn China market remained under handsome business activity as customers presence was vigilant and they have booked good quantities. Most of the customers are placing orders for limited quantities with hope that market gets better after ties between US and China officials.
• On the other hand, suppliers are getting firm with their sales position and we might see that prices will not show any flexibility in days to come. Customers have also recognized this and are now giving signs for slight increase in price than previously booked orders. Hence, things are not moving in positive direction. And we might see improved business activity in days to come.

 Other Markets:

• Korean Market and Hong Kong market remained dull and in active, most of the big buyer were unable to book sufficient quantities and as per our last visit to Korea it seems that they are more interested to buy the fabrics instead of yarns due to the change in business dynamics. It has been noticed that a popular yarn for the Korean market “Zero Twist” is also having less demand now a days. Overall these markets are responding really slow mainly for Pakistan. Korean CF yarn is having quite competitive rates.
• European customers floated reasonable level of inquiries and limited business has been finalized. During last week most of the buyers were busy floating programmed based inquires. However, only buying in chunks was observed.
• Deals of specialized yarn like zero twist and mélanges materialized this week along with some combed yarns which were placed in India due to better price levels. However, in blended yarns, Pakistan grabbed most of the orders in comparison to other markets outside Pakistan. Turkish market is also inactive with less demand.

 Local Fabric:

•  In current week under review the local fabric market feeling giddy but closed on firm note towards the end of the week with limited business materialization reported in the market as compared to last week.
• Major weavers are booked in narrow width till mid Feb’19 whereas wider width looms are covered till end Feb’19 and offering onward deliveries.

 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:

• An average business activity was seen from Far Eastern markets as customers were not actively sending their requirements. Limited inquiries were received from China, Bangladesh, Vietnam, Indonesia and Japan resultant limited booking during the week. Chinese customers were seeking very low prices which were not possible due to upward raw material prices. However, prices were stable and firm during the week. Suppliers are booked till end of Jan and offering mid ~ end Feb onward deliveries. It is forecasted that fabric prices will remain stable in coming days.

Following were the closing rates based on CNF Far Eastern ports.

 20×16/128×60=63”, in range of 1.12 to 1.14 per yd, 16×12/108×56=63” between USD 1.22 to 1.24 per yd and 20×20/108×5863” in range of USD 0.92 to 0.94 per yd based on CNF Far Eastern ports.

• European and USA customers were very active during the week. Suppliers got good number of inquiries hence conducted good booking both in narrow and wider width. Due to continuously good bookings from European and USA buyers, suppliers have extended their sales further.
• Wider width suppliers are offering early March onward deliveries. Prices for wider width remain stable due to stable raw material prices of fine counts. Suppliers are expecting that they will get good support from their regular customers in coming days.

 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 also slow last week. European markets buying was slow as well. Customers placed limited orders which they required on urgent basis. Article prices remained firm in last week because there was no significant change in raw materials. Suppliers were offering good prices as compared to the last weeks. So, keeping in view current prices and market situation it seems that prices will be firm in upcoming weeks.
• Suppliers are still seeking more orders to achieve 100% production capacity. Suppliers are booked till January 2019. 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:

• There were few inquiries in the garment sector during the week. Factories offered ninety days lead time on average. The order situation remained slow. Some basis garments orders were materialized for printing industry in EU.
• Factories have been focusing on closing the maximum orders before Christmas holidays. Pakistan’s apparel manufacturers have shown concerns over order placements. A delay has been seen in placements of orders from USA and EU customers in recent time owing to upcoming holidays.

Going Forward:

• In Local Yarn Market it is expected that market will be determined according to the US dollar against Pak Rupee and market will become stable with demand being the main driving force. 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 good business will materialize in days to come for January and mid-February shipments which will make things stable for spinners.
• In Local Fabric market indications are of slow market sentiments for coming weeks therefore it’s expected that market will move in a band with fluctuation of 1~2% on either side.
• In Export Fabric market it is forecasted that suppliers will get good orders from EU and USA buyers however Far Eastern markets may remain slow.
• In Home Textile Market as per our analysis market will remain slow from mid-December to Mid-January 2019 due to upcoming Heimtextil exhibition in Frankfurt and placements will be finalized either during or after the exhibition takes place as significant exhibitors are attending Heimtextil.
• In Garment Industry it’s a good time to place some orders as pricing points are not high despite the increased prices of raw materials.