Market Report – Pakistan 24th December 2018

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Local Cotton Highlights:

• Last week in local cotton market steady trend was observed as most of the mills kept on the sidelines in the process of slow trading. Buyers did not show much interest in bulk buying, despite of less cotton arrival of around 6.77 % comparative to the that of last year. Cotton activity globally is not increasing because of China and USA trade war.
• Ginners carrying stocks of around 1.8 million bales remained firm on asking, they didn’t oblige buyers in expectations of more profit in a day to come. Farmers might be having cotton of around 500k to 600K with them and will be supplying till February.
• Ready cotton prices remained firm last week in local cotton market with less activity. Prime cotton asking remained on the higher side, while low grades cotton showed softness in term of prices. On closing of last week the Karachi Cotton Association (KCA) spot rate dropped Rs.200 and came down on level Rs8,700 per maund. Cotton prices in China, U.S.A. and India were on the lower side. On the global stage and financial front, equity markets around the world suffered their worst year since the Great Recession of 2008. NYCF dropped sharply in this week and came down around 500 points due to less interest by china. China indulged in buying from brazil and other countries to maintain their stocks, it’s the major reason behind the international downward trend.
• According to the Pakistan Cotton Ginners Association (PCGA), total arrivals of seed cotton during the current season (August 2018 / July 2019), upto the 15th of December 2018 was 9,962,657 lint equivalent bales (155 Kgs).
• 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 8100 to Rs 8900 per maund (37.32 Kgs), while the lint prices from Punjab reportedly ranged from Rs 8300 to Rs 9100 per maund. Overall deals were made between the range of USC 71~80 Lbs. (8,100~9,100/ maund).

New York Cotton Futures:

 New York Cotton futures opened on lower side on Monday as compare to previous week’s closing figures.

• NYCF showed downward trend in whole week and closed on negative side by the end of the week.

At last day of the week, MARCH 2019 closed at 73.18 with fall of 536 points.

At last day of the week, MAY 2019 closed at 74.62 with decrease of 510 points.

At last day of the week, JULY 2019 closed at 75.96 with lower of 468 points.

Liverpool Index:

A was opened at 87.75 with Lower level from previous week’s closing figure.

• In this week Index “A” marched on lower side in this week and closed on negative side.
• At last day of the week, LPI “A” closed at 85.05 with decrease of 270 point as of opening figure of the week.

Crude Oil:

Crude Oil prices opened at USD 49.88 with lower level as compared to last week closing figures.

• In this week crude oil price increased in next session after opening but later dropped in whole week and closed on negative side at the end of week.
• In last day of the week, Crude Oil price closed at USD 45.59 with decrease of USD 4.29 cents as of opening figure of week.

Pakistan Currency Exchange Rates

• In last week values of Pak rupee showed stable trend 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 also closed on positive note with figure 1.27 against USD.

Local Yarn: 

• Local yarn market remained stable and slow in term of sales during last week and prices maintained same levels with limited buying activity observed in domestic market. Most of the weavers covered yarn against their sold fabric orders and spinners were interested to sell December with lifting of yarn available on cash payments.
• PSF price remained stable in domestic market by Ibrahim Fiber during last week ended. Crude oil prices declined, PTA, MEG prices remained stable 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 slow in fine cotton yarn counts and rates declined by Rs.5~7/lbs during this week ended. Blended yarn prices also were stable and limited activity reported.

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

Export Yarn: 

China:

• Export yarn china remained active during the week. Customers remained in market and kept on buying handsome quantities for January shipments. Overall deals were matured at more or less same levels like last week or slight increase was witnessed for selected brands.
• On the other hand, suppliers were also actively selling quantities as they don’t want to take any risk of keeping stocks with them. Hence, they have taken position by selling January shipments and in some cases, suppliers are on confirmed orders till mid-February.
• In coming days, market will remain firm and stable due to good booking position of suppliers. If we analyse the current situation, we can say that this buying was expected as Chinese customers were on side line since couple of months and now their stocks are depleting. We might see good activity in days to come with firm and stable market conditions.

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. As far as Hong Kong market is concerned, customers inquired for few large volumes inquires in carded and combed and limited business has been finalized.
• European Market remained comparatively inactive and floated limited number of inquires .Now they will place the orders after Christmas and new year holidays.

Local Fabric:

• The local fabric market is unable to keep its momentum therefore slow activity reported in current week under review whereas prices remained stable owing to firm posture of yarn market.
• In narrow and wider width fabrics weavers booked limited orders at last week price level and offering 3^rd week Feb ~ end Feb’19 onward deliveries. Even some air jet loom weavers are offering early March19 onward deliveries as well

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:

• Healthy business activity was seen from all sectors of the Far east and Asian regions. Good number of inquiries were received from Korea, China, Vietnam, Bangladesh, Thailand and Indonesia resultant good business was conducted with good volume. Prices were stable during the week due to stable raw material prices. Suppliers got good support from export markets hence they have extended their sales for next 50~60 days and now in very comfortable zone. Good suppliers are booked till end of Feb and offering early March onward deliveries whereas average suppliers are booked till mid of end of Jan and offering mid Feb onward deliveries. Suppliers are expecting slow business / order situation during next week due to coming Christmas and New year holidays.

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.

• Very aggressive buying was noticed both from Europe and USA sectors. Customers have booked good quantities both in narrow and wider width in range of T180~T300. Wider width suppliers have extended their sales further and now offering March onward shipments. Some of the cases, suppliers have April shipment available. Prices for wider width remained stable due to stable fine count yarn prices. Activity for next week expected to remain quite due to coming holidays.

Home Textiles:

• Customer floated good inquiries in the market & Maturity of business was limited. USA Market was firm in last week, customer floated limited inquiries and customer placed few orders of running Collection. European markets buying was slow. Customers placed limited orders which they required on urgent basis. As per forecast market will remain slow in December due to upcoming Heimtextil fair.
• Home textile articles prices suddenly changed due to devaluation of Pakistani currency. Due to currency devaluation yarn price went upward which affected the Home textile articles prices. Suppliers were offering 3 to 4% increase in prices as compared to the last 2 weeks.  So, keeping in view current prices and market situation it seems that prices will be further increased in upcoming weeks. As per the 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 to 100%. They are trying to 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 suppliers are offering 65 to 70 days for new orders & for repeat orders supplier are offering 50 to 65 days.

Garments:

• Garment Industry in Pakistan has witnessed a silent tone during the week in terms of order finalizations. Limited inquiries were observed and factories offered eighty to ninety days lead time. Dialogues for the next the year’s bookings haven’t been started so aggressively as teams have been engaged on Christmas and new year holidays.

Going Forward:

• In local yarn it is expected that market will be determined according to US dollar against Pak Rupee. Further trends of yarn will be according to demand and supply of different counts which will lead new price levels.
• In local fabric market it is expected to consolidate around current levels in coming weeks though indicators are pointing to slight easing.
• Export Yarn China market witnessed reasonable buying with firm and stable price trend. Customers stocks are reducing so they took decision to place orders before they are empty. We might see good business activity in days to come. In other market due to holiday season activity will remain closed or slow.
• In export fabric Business activity from Far East, Europe and USA was good both in narrow and wider width fabric as bulk orders were placed in the market. Suppliers are in very comfortable sales position for next 50~60 days however they are keeping their prices stable despite of good sales coverage. It is expected that business situation will remain slow in next week due to holidays in various origins.
• In home textile overall market was slow and business activity was not seen as good as compared to the last 2 weeks in the market but hopefully in coming days market will be stable. 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.
• In garment industry the sales figures will reveal the strengths, challenges as well as opportunities coming in our way next year.