Market Report – Pakistan 18th February 2019

Local Cotton Highlights:

• In last week selective buying was observed in the local cotton market, as buyers were conscious about quality and rates. Some mills and spinners showed interest in fresh buying of cotton but most of them were keen to get better variety at the cheaper rates. Cotton market received strength from reports that the US-China trade negotiations are moving in a positive direction and expectedly settlement is likely to be reached in the near future.
• The prices of cotton remained stable. The trading volume which showed downward trends during the last many weeks turned towards an upward trend. The Karachi Cotton Association (KAC) spot rate was stabilized at Rs 8600 per maund. Prices of cotton in China and India showed downward trend due to the less activity internationally. The cotton production world in India is low too. The prices of cotton are not increasing despite low production, even the volume of export is also low as compared to last year.
• Leading textile mills have signed agreements on the import of cotton in a large quality from abroad and they had started receiving delivery of cotton from abroad. There are chances of improvement in the China-USA economic ties in coming days. If the trade ties improve between China and USA then it is expected that trading volume will be increased in international market too.
• Prime Minister Imran Khan directed the concerned departments to take measures to achieve the production target of 15 million bales of cotton in coming season of 2019-20. It is expected that water problem will be solved to some extent in the coming season due to snowfall on hills. It is expected that growers who received reasonable price of Seed cotton (Kapas/Phutti) in this season, will take interest in increasing the production of cotton in coming season.
• 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 8000 to Rs 8800 per maund (37.32 Kgs), while the lint prices from Punjab reportedly ranged from Rs 8100 to Rs 8800 per maund. Overall deals were made between the range of USC 70~77 Lbs. (8,100~8,800/ maund).

New York Cotton Futures:

• New York Cotton futures opened lower level on Monday as compare to previous week’s closing figures.
• NYCF showed downward trend in two consecutive sessions, while later improved in last two sessions and closed on positive side by the end of the week.

At last day of the week, MARCH 2019 closed at 70.22 with fall of 33 points.

At last day of the week, MAY 2019 closed at 71.86 with increased of 10 points.

At last day of the week, JULY 2019 closed at 73.24 with upsurge of 11 points.

Liverpool Index:

A was opened at 82.05 with lower 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 79.65 with decrease of 240 point as of opening figure of the week.

Crude Oil:

Crude Oil prices opened at USD 52.41 with low level as compared to last week closing figures.

• In this week crude oil price showed upward 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 55.59 with increased of USD 3.18 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 positive note with figure of 1.13 and British Pound also closed on positive note with figure 1.29 against USD.

Local Yarn:

• Local yarn market went quite another week in a row. Asking price by mills remained stable but limited business was finalized. Most of mills were interested to sell further yarn especially 30/1 and above but buyers remained selective in their buying. Only urgent count covered at this price level.
• PSF price remained same 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 remains 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 showed slow sentiment for another week. Although customers are back from holidays partially but still there is no buying witnessed. Customers are mainly focusing on their upcoming shipments and planning to sell out their stocks.it is also witnessed that there has been handsome number of containers arriving China and traders’ stocks are piling up. So, we might see dullness for upcoming couple of days.
• Suppliers are showing firm sentiment but if there is no buying witnessed in next couple of days, they might show flexibility in asking their prices to get orders. Hence, things will get clear in coming 1-2 weeks that which direction market will be moving.

Other Markets:

• Korean market remained slow, few inquiries of specialized yarns like zero twist were floated in the market without any order finalization. Koreans are more interested to buy the fabrics instead of yarns, however, still few yarns are always under discussion like PVA yarns. HK, customer came by the end of last week and asked for general update about prices without any firm requirements.
• European customers floated reasonable level of inquiries and limited business has been finalized. During last few weeks most of the buyers were busy in the floating inquires with very low bids. Moreover, only buying in chunks. EU, Customers were busy in Texworld Paris as well which was held from 12^th to 14^th Feb’19. Mainly deals of specialized yarn like slub yarns and mélanges were also materialized this week along with some combed p/c yarns which were placed in India due to better level of price. Turkish Market is also inactive with less demand.

Local Fabric:

• In current week under review the local fabric market closed on a firm note amidst of improving market sentiments for both narrow and wider width fabric markets.
• Weavers received inquiries consistently but in limited numbers. Weavers booked some orders at their will after some negotiation as yarn market showed firm posture throughout the week. Narrow width looms are booked till end March/early April’19 whereas wider width looms are booked till 3^rd Week April ~ End April’19 and onward deliveries are available.

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:

• Far eastern market was slow during the week due to slow demand from their end customers. Chinese customers just resumed their work hence no considerable inquiries were noticed. Limited activity was observed from Korea, Thailand, Indonesia and Japan. Overall week went slow in regard of the business materialization. Asking prices were stable due to stable raw material prices. 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 early ~ mid April onward deliveries. It is forecasted that business activity will pick up in coming days however quantities may in small instead of bulk programs.

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 0.94 to 0.96 per yd based on CNF Far Eastern ports.

• Limited number of inquiries were received from the European markets as most of the customers were participating TexWorld and Premier Vision textile fair held in Paris. There were good meetings between suppliers and customers during the fair and exchanged good program-based orders which ma finalize during coming days. Customers have more concern about the deliveries as the suppliers were offering 55~60 days in narrow width and 60~70 days in wider width fabric. Wider width suppliers are getting good orders hence their sales position is much better. Now it is difficult for them to accommodate customers required deliveries. USA market was active in term of inquiries but no considerable business was noticed during the week.

Home Textiles:

• Home textile market remained active last week. Customer floated good number of inquiries in the market for the upcoming orders & ratio of business maturity was good since last three weeks.
• USA Market was also active in last week & customer placed new orders for their running and new Collections. European market buying has remained active as well. 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 in order to capture further orders.
• So, keeping in view current prices and market situation it seems that prices will remain firm in upcoming weeks and there will be no significant change in prices. So as per forecast, price trends will be at current level in coming weeks. Suppliers have orders up to March, 2019 but they are under sales pressure to fulfill their capacities 100%. 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:

• Pakistan Apparel Industry is expecting smooth seasonal loading from different markets of world. Some of OV lines (outstanding value) or the core programs are being materialized with renowned retailers. This lead will further strengthen the industry’s core strength which is predominantly cotton rich fabrics as well as the finishes/ washes. High fashion end stream is getting good attraction too and this percentage of business will certainly contribute in value addition business.
• Prices are a point of attraction for customers across the globe as despite devalued Pak Rupee during last couple of months factories here have not increased their prices to that level. Lead times are being offered from sixty to ninety days depending upon the types of the garment.

Going Forward:

• In Local Yarn Market it is expected that market will remain stable due to good activity observed in yarn and fabric both domestic and export market. Further price trends of yarn will be according to demand and supply of different counts which will lead price levels.
• In Export Yarn China market, it is expected that yarn business will remain slow in upcoming week. However, exact situation will be cleared in couple of weeks. In Other markets business activity remained slow as far eastern customers were partially available during the week. European buyers were seeking lower prices. So, their response was slow in term of order finalization.
• In Local Fabric strong market fundamentals will not let Local fabric market ease down for coming weeks for all fabric widths.
• In Export Fabric Market, limited business activity was seen from the Far Eastern markets. European customers were attending TexWorld and Premier textile fair in France where good meetings were conducted however limited business was placed. USA market was little bit active however business placement may be observed in coming days.
• In Home Textile Market overall market is better and in coming days it looks situation will be further improve as per forecast market will be boost up and customers will make decisions to buy in bulk quantities because prices trend will be remained on current level in coming weeks.
• Garment Sector in Pakistan is moving towards positive developments and orders from major brands are being placed.