Market Report – Pakistan 31st December 2018

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Local Cotton Highlights:

• Last week in local cotton market modest trading activity was seen, most of the buyers and spinners remained on the sidelines in the process of slow trading. Cotton business is facing dullness locally with another factor being the end of the year closings. Most of the larger mills have covered their cotton stocks. Ginners were firm in expectations of the better profit margins in days to come. Despite of that most of spinners are focusing on import of cotton from other regions to cover their requirements.
• On the local cotton market, despite the fact that cotton consumption this year (August 2018/July 2019) may range between 14.5 and 15 million bales (155 kgs) and the production in Pakistan could range from 10.5 to only 10.75 million bales, cotton prices remain mostly listless. End of the current calendar year coupled by almost one year of global recession (2018) have pulled down cotton prices both internationally as well in the domestic market. In the recent past, the cotton futures contract shuttled between 75 cents to 80 cents per pound during the earlier months in New York, today it is close to 73 cents per pound. Karachi Cotton Association (KCA) spot rate maintained the level of Rs8,700 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 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 moved both way in this week and closed on negative side by the end of the week.

At last day of the week, MARCH 2019 closed at 72.19 with fall of 36 points.

At last day of the week, MAY 2019 closed at 73.49 with decrease of 31 points.

At last day of the week, JULY 2019 closed at 74.52 with lower of 52 points.

Liverpool Index:

A was opened at 83.40 with Lower level from previous week’s closing figure.

• In this week Index “A” showed fluctuations on both way and closed on negative side.
• At last day of the week, LPI “A” closed at 81.95 with decrease of 145 point as of opening figure of the week.

Crude Oil:

Crude Oil prices opened at USD 42.53 with lower level as compared to last week closing figures.

• In this week crude oil price showed mix trend in whole week and closed on positive side at the end of week.
• In last day of the week, Crude Oil price closed at USD 45.33 with increased of USD 2.80 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 terms of sales during last week with prices maintaining their level and limited buying activity observed in domestic market. Most weavers covered yarn against their sold fabric orders and spinners were interested to sell December, allowing lifting of yarn on ready cash payment.
• PSF price remained stable in domestic market by Ibrahim Fiber during last week ended. Crude oil prices declined, PTA, MEG prices remained stable n soft 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 import value and US dollar against Pak rupee.
• Faisalabad trading market was slow in fine cotton yarn counts and rates remained stable with limited activity. Cash became short due to end DEC closing and 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:

• Chinese customers showed good activity for this week and placed handsome quantity orders with slight increase in prices. Suppliers were selling yarn for January shipments aggressively to secure their self-firm keeping stocks. Now suppliers are comfortably booked. Even some suppliers are sold out for February shipments as well.
• On the other hand, customers are opening LCs in a good pace which shows that current price levels are comfortable and they will place further order quantities at same price levels. In coming days, market will remain firm and stable due to good position of suppliers. If do the analyses of the current situation, we can say that this buying was expected as Chinese customers were on quiet from couple of months and now their stocks are depleting.

Other Markets:

• A major development seen last week that the Korean market has also started sending inquires to Pakistan mainly in 16/1 cd and 20/1 cd. So, it is expected that few orders will be placed from this market during Jan. Hong Kong market opened with slight improvement in terms of Inquires. Reasonable level of business has been finalized.
• In European market most of the customers were on Christmas Holidays. Few inquiries were floated to check the prices. However, most of the deals remained unclosed.

Local Fabric:

• In current week under review the local fabric market sustained and held its last week pattern for both narrow and wider width fabrics. Therefore, week closed at last week level with slow and limited activity reported in the market.
• Weavers are comfortably booked till 3^rd week Feb ~ end Feb’19 for narrow width and end Feb/early March’19 for wider width looms 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:

• Comparatively slow market sentiment was seen during the week due to year ending. Far Eastern customers remained busy in their closing year hence did not show interest in fresh buying. Just few numbers of inquiries were received from Korea, China and Vietnam whereas other Asian and Far Eastern markets remained almost quite Suppliers had good booking already in hand thus they are not in hurry for fresh buying nor they are not chasing their customers. Currently good suppliers are booked till end of end of Feb and offering early Mar onward deliveries whereas average suppliers are booked till mid of Feb and offering end Feb onward deliveries. It is expected that market activity may remain slow during first week of the month as usual.
• Overall this year had flow of inquiries from Far Eastern and Asian countries thus healthy and stable business was witnessed despite of many challenges regarding shortage of raw material, currency devaluation and price fluctuations

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

20×16/128×60=63”, in range of 1.08 to 1.10 per yd, 16×12/108×56=63” between USD 1.18 to 1.20 per yd and 20×20/108×5863” in range of USD 0.90 to 0.92 per yd based on CNF Far Eastern ports.

• Slow market activity was seen from almost all regions of Europe due to year ending and holiday mood. Limited number of inquiries were received from Germany, Spain, Italy and Portugal however no considerable business activity was witnessed. Prices were stable during the week due to stable raw material prices.
• Suppliers are expecting slow business activity during next week for business point of view however number of inquiries may exchange good as customers will prepare themselves for upcoming Heimtextil meeting which held in Germany by mid of next month. Limited inquiries were received from USA buyers but no buying was witnessed during the week.
• Suppliers had got good support from Europe and USA buyers during this year as good quantities were sold. Suppliers had developed some new markets as well as new buyers hence their volume was also increased during the year. It is expected that suppliers will further develop new buyers and markets during the next year to have smooth business.

Home Textiles:

• Home textile market was Slow in last week, due to upcoming Heimtextil fair. As both regular buyers and supplier were busy with exhibition preparations and exhibition samplings. Customer floated limited inquiries in the market & maturity of business was limited. USA Market was also slow in last week & did not seen good activity with order placements. European markets buying was slow & placement of order was also slow. Customers placed limited orders which they required on urgent basis. As per forecast market will remain slow for December and January.
• Home textile articles prices suddenly changed due to devaluation of Pakistani currency. Due to currency devaluation yarn price went upward which effected the home textile articles prices. Suppliers were offering 3 to 4% increased prices as compared to the last 2 weeks.  Prices might go up further if the situation continues.
• 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 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:

• Due to Christmas Holidays current week has observed a silent mode in terms of inquiry sharing and order finalization.
• In recent time garments manufactures have not increased their prices compared with raw material prices to get further business from EU and USA. Factories normally are working on eighty to nighty days lead time depending upon the type of the garments. Bulk placements are expected from End Feb onward for fall winter season.

Going Forward:

• In Local Yarn Market it is expected that market will be determined according to the demand that prevails in the market in the coming days. Further trends of yarn prices will be according to demand and supply of different counts which will lead price level.
• In Export Yarn China market will remain firm and stable for coming weeks as supplier are sold well and they will not reduce their prices and in other markets a major development has taken place with inquiries being received from the Korean market plus Pakistani exporters are expecting a better outcome of Heimtextil fair in Germany, there are rising hopes of winning several booking orders from the participating countries in the Heimtextil exhibition.
• Though local fabric market largely remain unchanged but significant amount of uncertainty started gripping the market therefore market is expected to remain slow in coming weeks.
• In Export Fabric Market there has been a general slowdown of activity both from Far Eastern, Asian, USA and European sectors due to last week of the year. Customers were busy in their year closing paper works hence did not show interest in fresh buying. It is expected that next week may remain slow as well and activity will start from mid of next month.
• Home Textiles Market will remain slow because of the upcoming Heimtextil fair for which both buyers and suppliers are busy with fair sampling.
• In garment sector overall, the industry is flourishing with a bright future as factories are working on their full capacities. And further units are being invested in.