Market Report – Pakistan 11th February 2019

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Local Cotton Highlights:

• Last week trade volume remained slow because textile mills didn’t show much interest in cotton procurements. One of the main reasons behind the slowdown is the ongoing China-US dispute. Pakistan production of cotton this year is 8 % lower than the last year. The big textile groups have signed agreements of three million bales of cotton from abroad to cover the deficit.
• The reason behind low trading volume could be that, the government has abolished sales tax and import duty on the import of cotton during February 1, to June 30 and mills and importers are focusing on import. Whereas, the ginners were facing a kind of uncertainty due to unsold stock of 15 lakh bales of cotton with them. Due to the cautious buying of textile and spinning mills in the cotton market last week the prices of cotton remained largely stable. Karachi Cotton Association (KAC) spot rate dropped Rs. 100 in this week and touched the level of Rs 8600 per maund.
• ICE cotton futures fell and touched their lowest level in three weeks on renewed worries about any near-term resolution of US-China trade tensions. The front-month contract slipped to its lowest since Jan’16 at 72.48 cents. US President Donald Trump and Chinese President Xi Jinping are unlikely to meet before their countries’ March 1st deadline to reach a trade deal. The trade dispute between top exporter US and biggest consumer China, largely led to cotton’s first yearly decline in four years in 2018.
• Prices of seed cotton (Kapas/Phutti) in Sindh were in range from Rs 3000 to Rs 3500 per 40 Kgs, while in the Punjab the seed cotton prices reportedly ranged from Rs 3000 to Rs 3600 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 8900 per maund. Overall deals were made between the range of USC 71~78 Lbs. (8,100~8,900/ maund).

New York Cotton Futures:

• New York Cotton futures opened lower level on Monday as compare to previous week’s closing figures.
• NYCF marched upward in three consecutive sessions, while dropped in last two sessions, hence closed on negative side by the end of the week.

At last day of the week, MARCH 2019 closed at 72.55 with fall of 85 points.

At last day of the week, MAY 2019 closed at 73.69 with decreased of 80 points.

At last day of the week, JULY 2019 closed at 75.01 with low of 96 points.

Liverpool Index:

A was opened at 83.75 with slight upper level from previous week’s closing figure.

• In this week Index “A” showed downward trend, while recovered on closing, hence, closed on negative side.
• At last day of the week, LPI “A” closed at 82.65 with decrease of 110 point as of opening figure of the week.

Crude Oil:

Crude Oil prices opened at USD 54.56 with low level as compared to last week closing figures.

• In this week crude oil price showed mix trend 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 52.72 with decreased of USD 1.84 cents as of opening figure of week.

Pakistan Currency Exchange Rates

• In last week values of Pak rupee slightly improved 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 1.29 against USD.

Local Yarn:

• Local yarn market went quite during this week. Asking price by mills remained same but limited business was finalized. Most of mills were interested to sell further yarn but buyers remained selective in their buying. Only urgent count was covered at this price level.
• PSF price remained stable during this week ended. PTA, MEG and Crude oil prices were also stable during this week ended. Import price for fiber remained stable during this week and it is expected that local fiber price will remain stable and firm.
• Faisalabad trading market was slow for staple yarn, active for blended yarn and stable for fine cotton yarn counts.  Limited business activity reported on whole during last week ended.

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

Export Yarn:

China:

• Export yarn china market remained dull and slow due to holidays in China. Customers remained silent and no such activity was witness unlike last years. Normally, despite of holidays, customers remained in market and kept on booking limited quantities when they get attractive offers. However, this year, there has been complete silence and customers didn’t show any interest in buying.
• If we analyses this situation, it is expected that even after holidays, customers will not be in aggressive mood of buying and business activity will remain minimal.
• On the other hand, suppliers are also comfortable as most of suppliers are sold till mid-March. However, pressure might build up if customers did not place orders till end of February.

Other Markets:

• Insignificant activity has been noticed in Export Yarn Market. Prices remained stable in term of asking but spinners were interested to receive the final bids from buyer’s side to catch every possible order.
• In Far Eastern market, Korean, HK, etc. remained closed for Chinese New Year with no major activity.
• European Market remained inactive in the beginning of week however, in middle of the week reasonable amount of inquiries were received Although, customers were still in the opinion that prices will drop down in upcoming days.
• Turkish buyers remained silent only few deals of double yarns reported on lower level of prices from the needy mills.

Local Fabric:

• The local fabric market moved in a tight trading range and performing better than expected continuously since last month for both narrow and wider width fabric markets.
• Weavers received inquiries in limited numbers and booked orders at their set inflows while showing firm attitude. Weavers extended their further booking and now offering end March onward for narrow width and early April ~ Mid-April onward for wider width looms. Whereas special looms delivery available May’19 onward.

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 0.98 to 1.00 per yard based on ex mills.

Export Fabric:

• Another week went slow for Far Eastern markets because of New Year holidays. Asking prices were stable with firm tone because of firmness in raw material prices. Suppliers are expecting some good inquiries during next week as customers will start enquiring the fabric as per their program-based orders. Currently good suppliers are booked till early of April and offering mid ~ End April onward deliveries whereas average suppliers are booked till end of March and offering April deliveries.

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.

• Good number of inquiries were received from European sector. Germany, Portugal, Italy and Spanish customers have exchanged good inquiries resultant decent volume during the week. Wider width demand further increased by the customers hence suppliers are in very comfortable zone hence they are offering end April onward deliveries. USA buyers were also active however orders are under discussion and expected to place during coming days. Prices for wider width remained firm due to firm yarn prices. Suppliers are expecting good demand from Europe and USA regions in coming weeks.

Home Textiles:

• Home textile market remained active in last week. Customers floated good number of inquiries in the market for the upcoming orders & ratio of business maturity was good since last two weeks. USA Market was also active in last week & customer placed new orders for their running and new Collections. European market buying was also active & business maturity was good as compared to the last two weeks.
• Home textile Prices are still firm and no change is observed in prices as compared to the last few weeks. Suppliers were offering good prices to capture the orders. Suppliers have orders up to March, 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:

• The development flows have been increased recently which has given hope to the Pakistan apparel manufacturers for a better 1st and 2nd quarter in 2019. The manufacturers have shown a flexible tone in asking prices to get more business from EU and USA.
• At the same time stock levels with customers have slowed down the process for everyone. Recent development flow and order maturity in current months would be the decider to determine growth pattern for year. Lead time is being asked from sixty to ninety days depending upon the type of the garments.

Going Forward:

• In Local Yarn Market it is expected that market will remain stable due to good activity in yarn and fabric in both domestic and export market. Further price trends of yarn will be according to demand and supply of different counts which will lead price level.
• In export China Market overall raw material prices are firm and it is expected that buying will start at same price levels which was back in January. In other markets business activity remained slow as Far eastern customers were not available during the week. European buyers were inactive and seeking for lower prices. So, their response was slow in terms of order finalization. It is expected that yarn business will remain slow in upcoming week. However, exact situation will be cleared after arrival of Chinese customers from holidays
• Local Fabric market will continue out of stress sentiments for coming weeks for all fabric widths.
• In Export Fabric Market Far Eastern business remained dull due to holidays. Europe and USA sectors were active hence good booking was observed both in narrow and wider width. Good demand is expected from all of export markets during coming weeks and prices may remain stable in same range.
• Home Textiles market is better and in coming days it looks as if situation will further improve and customers will make decisions to buy in bulk quantities because price trends will remain on current levels in coming weeks.
• In Garment industry Pakistan Apparel Industry is expecting smooth seasonal loading from different markets of world.