Market Report – Pakistan 21th January 2019

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Local Cotton Highlights:

• Modest trading activity was seen in local cotton market in the last week. Many mills and buyers were reluctant in placing huge orders and didn’t show much interest in buying. Some of the Mills showed interest on importing cotton from US and India including other countries owing to the cheaper rates and better quality but it has also been observed that despite of the removal of import duties on raw material, Indian cotton is currently available around 43,000 rupees for candy (1 candy = 356 kg), while prices in Pakistan are at sub 43,500 rupees making it (exports) unviable so far to import from India which is not competitive right now, hence if the lint prices in Pakistan rises, then import will pick up. Pakistan has imported about 400,000 bales of cotton so far this season from India.

• Karachi Cotton Association (KCA) spot rate maintained the level of Rs 8,700 per maund. PCGA issued report on seed cotton (Phutti) as over 10.4 million bales reached the ginneries across the country till January 15, showing a shortfall by 7.74 percent as compared to corresponding period last year.

• Prices of seed cotton (Kapas/Phutti) in Sindh were in range from Rs 3000 to Rs 3800 per 40 Kgs, while in the Punjab the seed cotton prices reportedly ranged from Rs 3300 to Rs 3800 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 9075 per maund. Overall deals were made between the range of USC 71~79 Lbs. (8,100~9,000/ maund).

New York Cotton Futures:

• New York Cotton futures opened on upper level on Monday as compare to previous week’s closing figures.

• NYCF dropped in next session and then marched upward in two sessions, later dropped on closing, hence closed on positive side by the end of the week.

At last day of the week, MARCH 2019 closed at 73.89 with rose of 90 points.

At last day of the week, MAY 2019 closed at 75.32 with increased of 81 points.

At last day of the week, JULY 2019 closed at 76.59 with improved of 80 points.

Liverpool Index:

A was opened at 82.40 with lower level from previous week’s closing figure.

• In this week Index “A” showed fluctuations on both ways, hence closed on positive side.

• At last day of the week, LPI “A” closed at 82.90 with increase of 50 point as of opening figure of the week.

Crude Oil:

Crude Oil prices opened at USD 50.51 with slight low level as compared to last week closing figures.

• In this week crude oil price showed rising trend in whole week, except of one session and closed on positive side at the end of week.

• In last day of the week, Crude Oil price closed at USD 53.80 with increased of USD 3.29 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 negative note with figure of 1.14 and British Pound closed on positive note with figure 1.29 against USD.

Local Yarn:

• Local yarn market remained firm in calling prices from start of this week and ended with some increased prices with good activity. Buyers were active to cover yarn against their sold fabric orders. Coarser count was up for 21/1 as it was too much in demand and prices increased due to good demand in both export and local market. Sellers were busy in selling yarns with better prices achieved during this week’s sale.
• PSF price increased by Rs.3/kg on 14^th Jan 2019 in domestic market by Ibrahim Fiber. Crude oil prices remained stable, PTA, MEG prices remained same in International market during this week and China polyester prices also remained stable by end of this week. It is expected that price of polyester in domestic market will remaine same for next week.
• Faisalabad trading market was active in blended yarn and limited activity was reported in fine cotton yarn counts and rates remained stable by end of this week.

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 less interest to book at higher levels.

• There was a handsome quantity of business confirmed in last couple of weeks and after that, all suppliers increased their prices by 3-4% having said that they are selling below cost. Major reason for these sales even with loss was to come out of stock piling pressure that building on them. Hence, now suppliers are quite comfortable with their sales and increasing their prices in line of raw material prices which are on a higher side.

• There is tug of war going on between suppliers and customers which may end up with limited business activity unless and until prices are settled from both ends. Generally good mills are sold till end Feb and offering march shipments whereas average quality mills are selling end feb shipments.

Other Markets:

Other markets remained steady with nominal activity. Heimtextil 2019 Fair went really well. Big groups of Pakistani suppliers were able to achieve handsome orders. Pakistani Spinners were already in comfortable zone and there was slight improvement in prices observed by the end of last week. So, it is expected that rates may pick up again.

Korean market   remained extremely dead in another week in raw. Most of the Korean customers are just checking prices. HK Market showed very slow activity   in the beginning of this week. Few inquiries of double yarns received from customer’s side. However, no considerable deal has been finalized yet due to the rise in prices.

European Market remained active during last week. Most deals of specialized yarns were placed like Mélanges, Zero Twist, Organic and Spackled Yarns. So, it is expected that activity will improve next week.

Local Fabric:

• The local fabric market entered in consolidation zone after stabilizing itself for a month and seems in buoyant mood for both narrow and wider width fabric markets.

• Slow activity reported in the market but trading optimism before Chinese holidays created buying interest in local fabric market. Weavers are comfortably booked till early March’19 for narrow width and early-mid 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:

• Limited business activity was observed from Asian and Far eastern customers. Customers have sent limited inquiries during the week hence limited orders were placed. Prices were firm because of firm raw material prices. Asking prices were increased by 1~2% by the suppliers.

• Currently good suppliers are booked till end of March and offering early April onward deliveries whereas average suppliers are booked till mid of March and offering end March onward deliveries. Customers are facing difficulty to get required deliveries because suppliers have good sales coverage hence, they are offering more than 60 days lead time. It is expected that average kind of business activity may observe in coming weeks due to slow demand especially from China due to their upcoming New Year holidays.

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

20×16/128×60=63”, in range of 1.10 to 1.12 per yd, 16×12/108×56=63” between USD 1.20 to 1.22 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 customers are back after attending Heimtextil 2019 fair. During the fair, good business was observed as home textile and ready to made garments has got program-based orders. The finishing units will place grey fabric orders in the marker during coming weeks which will boost up domestic sales. Generally, a smaller number of inquiries in grey fabric were received from Germany, Portugal, Spain, Italy and France during the week.

• Wider width suppliers have got good orders during the Heimtextil 2019 fair thus they have extended their sales till April and offering now end April onward deliveries. Prices for wider width remain stable due to stable raw material prices in fine counts. It is forecasted that average business activity may be observed in the upcoming week from European sectors however good quantity of orders are expected from the USA market.

Home Textiles:

• Excellent inquiries from some of the prospect and customers met at Heimtextil 2019 fair were placed in the market but Maturity of business was limited. USA Market was also slow in last week due to the fair visits and placed limited orders for their running Collections.

• European markets did not place any new orders due to Heimtextil fair visits and meetings. Customers reviewed the new developments and trends on Heimtextil 2019 and they are now preparing their new collections to place the orders. Hopefully inquires for new collection will be received from next week.

• Home textile articles prices were slightly decreased in last week and supplier quoted prices almost 2 to 3% less as compared to the last two or three weeks. After Heimtextil 2019 meetings with the customers, suppliers changed their costing parameters to capture maximum orders as per their production facilities. So, keeping in view current prices and market situation it seems that prices will remain on same level in future and customers will place new orders as they discussed at the Heimtextil 2019 fair. 

• Suppliers have orders up to February 2019 but these are not sufficient for their available production capacities. So, suppliers are open to more orders in order to fulfill their capacities at 100% from different customers / markets. As far as shipments are concerned supplier are offering 65 to 70 days for new orders & for repeat orders supplier are offering 50 to 65 days.

Garments:

• Holiday mood slowly started diminishing as buyers were seen floating inquiries during the week. Limited business was finalized against inquiries for basic articles. Fashion articles are yet to be placed in bulk as designers are working on that. Factories are running at their full capacities for the orders already in hand. Lead time being offered from eighty to ninety days.

• Prices have not been increased by the factories as they are interested to grab orders to keep production capacities in running. Pakistan has witnessed an evolution in Garment industry as we have observed that industrialists who were initially engaged in spinning or weaving have ventured into Finished Garment Production as they have realized that profitability builds up with each process.

Going Forward:

• In Local Yarn Market it is expected that market will remain stable and firm due to good activity in yarn and fabric market. Further price trends of yarn will be according to demand and supply of different counts which will lead price levels.

• In Local Fabric market weavers are flying high expectations to earn good profits therefore local fabric market may tend to show firm posture for coming weeks.
  
• In Export Yarn China market overall, it will remain firm and stable with tendency of further price increase. Customers are resisting against prices but due to good demand, business might resume with slight correction in prices in days to come.
• In Export Fabric business activity for both narrow and wider width remained mixed during the week. European customers have less demand however good orders maybe observed from USA buyers during the next week. Prices are expected to remain firm with tendency to go upward by 1~2% in coming days.
• In Home Textiles industry overall market was slow and business activity was not seen good as compared to the last month in the market solely due to Heimtextil fair visits by customers and prospective buyers. Customers behavior was much encouraging for the suppliers for future and hopefully in coming days market will be stable and customers will place new orders.
• The Apparel Industry of Pakistan has invested a significant amount in developing not only the infrastructure but also the Human Resource that is needed to achieve sustainability and this has led to big brands getting attracted towards placing their orders in the coming months.