Market Report – Pakistan 25th February 2019

Local Cotton Highlights:

• In last week slightly improved activity was seen, mills showed interest in buying of fine quality cotton to replenish their stocks following the fears of cancellation of import orders by Indian exporters. Increase in cotton buying was based on rising fears of fixing of higher duty by Pakistan in retaliation of Indian move of imposing 200 percent on the local products due to the recent rift created between the two nations because of Kashmir attack.
• There are rumors circulating regarding the imposition of duty on many products and about 250 to 300 containers of cement and dry fruits are stuck at the border. Keeping in view the situation the exporters of Indian cotton were in dilemma and they were avoiding export orders. It is expected that due to this situation the local importers will start showing interest in buying from local ginners. Due to this reason on Friday textile and spinning mills were seen buying 15000 bales.
• During the last week, overall trading has improved but prices remained soft, the prices of cotton decreased by Rs 100 to Rs 150 per maund. The Karachi Cotton Association (KAC) spot rate dropped Rs.100 and touched the level of Rs 8500 per maund.
• PCGA shows an overall decline of 6.83 per cent at 10.7 million bales over the consequent period last year due to the use of poor-quality seed and pesticides. Punjab recorded a decline of 9.41 percent decline at 6.552m bales. Sindh, which suffered deficient due to scarcity of irrigation water at sowing stage, illustrate a 2.44pc fall in cotton production. Baluchistan which is the only province that produces organic cotton was up by 0.99 per cent and stood at 117,852 bales.
• 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 with higher level on Monday as compare to previous week’s closing figures.
• NYCF showed mix trend in this week and closed on positive side by the end of the week.

At last day of the week, MAY 2019 closed at 73.01 with increased of 82 points.

At last day of the week, JULY 2019 closed at 74.17 with upsurge of 69 points.

At last day of the week, OCT 2019 closed at 73.84 with upsurge of 43 points.

Liverpool Index:

A was opened at 79.95 with improved level from previous week’s closing figure.

• In this week Index “A” showed upward trend and closed on positive side.
• At last day of the week, LPI “A” closed at 80.30 with increased of 35 point as of opening figure of the week.

Crude Oil:

Crude Oil prices opened at USD 56.09 with high 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 57.26 with increased of USD 1.17 cents as of opening figure of week.

Pakistan Currency Exchange Rates

• In last week values of Pak rupee showed fluctuation 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 1.31 against USD.

Local Yarn:

• Local yarn market remained firm during this week ended. Good activity floated in the market and reasonable sales were made by the mills. Most of weavers were in a hurry to cover yarn against their sold fabric orders.
• PSF prices remained same during this week ended. PTA, MEG and Crude oil prices gradually increased from last two weeks. Import price for fiber remained firm during this week and it is expected that local fiber prices will remain stable and firm.
• Faisalabad trading market was active and good buying reported for Viscose yarn, it was also active for blended yarn including fine cotton yarn and good business has been finalized.

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

Export Yarn:

China:

• Export yarn china market showed sluggish sentiment for another week in a row. Customer stayed on side line and very few enquiries were floated. Limited quantity orders were confirmed only at the level where customers got their required price satisfaction.

Other Markets:

• Insignificant activity has been noticed in Export Yarn Market. Prices remained stable and spinners preferred to sell in domestic markets as they were getting better prices.
• 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. Few inquiries of specialized yarns like Mélanges and zero twist were reported without reasonable business. Limited inquiries were received from Vietnam and Indonesia mainly for the specialized yarns. It is expected that business will materialize in next couple of weeks. As far as Hong Kong market is concerned, customers inquired for few and large volume inquires but none of deals were finalized.
• European Market remained normal and floated limited number of inquiries during the start of the previous week. They were interested to place the orders but very reluctant to buy the bulks. Moreover, most of the Portuguese traders are carrying stocks. However, there were few programmed bases inquires in Organic yarns especially which are expected to be finalized during next week. Turkish customers also inquired for regular and specialized yarns and booked limited quantities with improved prices.
• Business from Bangladesh was also slow.

Local Fabric:

• Business climate in local fabric market remained steady and slow for both narrow and wider width fabric markets whereas prices showed hint of upward trend with slight increase in yarn prices.
• Weavers extended and consolidated their current booking positions with positive bias throughout the week. Current weavers are booked till early ~ mid April for narrow width and early~mid May for 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 0.98 to 1.00 per yard based on ex mills.

Export Fabric:

• Fare astern market is not responding well during last couple of weeks due to slow demand. Limited inquiries were exchanged after middle of the week but no considerable business activity was observed. Fabric prices remained firm due to increase in yarn prices. Suppliers rather increased their prices about 2% further. It is expected that fabric prices may remain firm and upward in response of raw material increase.
• Currently good suppliers are booked till mid of April and offering end April onward deliveries whereas average suppliers are booked till end of March and offering mid-April onward deliveries. Market activity is expected to remain slow in coming days.

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.

• European customers have exchanged too many inquiries during the week both in narrow, wider, basic, dobby and fine count items however just offering the prices by the suppliers and they may have negotiation on orders in coming days. European sector is doing well hence suppliers are more in touch with their customers. Prices for wider width was stable during the week. Suppliers are comfortably booked wider width looms ill end of April hence offering May onward deliveries.
• USA customers remained slow during this week as limited inquiries were noticed without any considerable orders. Good orders are expected from European and USA market in coming days.

Home Textiles:

• Home textile market was firm in last week. Customers floated limited inquiries in the market, few inquiries were just for prices checking & ratio of business maturity was limited as compared to the last two weeks.
• USA Market was also slow in the last week because customer is waiting for the Market week which will be held in March 2019. Customers will place the new orders after Market week exhibition keeping in view the new trends which supplier will present during market week.
• European markets buying was also firm & business maturity was slow as compared to the last two weeks.
• Prices are firm. Suppliers are offering good prices to capture the orders due to slow activity. Suppliers have orders up to Mid-April, 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:

• Pakistan has felt positive vibes in Apparel Industry during the past. Garments industry is dealing with many opportunities and looking forward a huge business wave coming this way. Last week witnessed a normal level of order placements. Normally factories have offered three months lead time from order placements
• Pakistan is a strong source base for fleeces and heavy weight fabric garments. Better compliances and sustainable product and production options in factories and have been one major factor for getting interest of different buyers across the globe. Many of the factories have started their expansion programs as they are forecasting better volumes in future.
• Pakistan being manufacturing facility to many world-renowned brands and moving consistently towards digitalization through e-commerce, e-business and virtual business, which enables a direct link to global market which operates in the age of digital presence.

Going Forward:

• In Local Yarn Market it is expected that market will remain stable and firm, due to good activity done in domestic market of yarn and looms are also sold massive for future order. Further price trends of yarn will be according to demand and supply of different counts which will lead price level.
• Response in Export Yarn China is not positive and if this situation prolongs then suppliers might get under pressure. On the other hand, suppliers are getting handsome quantity orders from domestic market and price level is also better if compared with export. Hence, they are showing interest to sell in domestic market. In other markets business activity remained slow especially from Far eastern customers. European buyers were seeking lower prices as they are having stocks. However, spinners are showing resistance to accept the same. It is expected that yarn business will remain slow in upcoming week. However, prices will remain stable.
• The Local Fabric Market will continue its bullish and consolidation theme for coming weeks for all fabric widths.
• In Export Fabric Market the Far Eastern markets were dull during the week and expected to remain slow in coming days as well. European and USA buyers were active. Supplier may get good orders from both sectors in next coming days.
• In Home Textiles overall market was slow and in coming days it looks as if the situation will improve, as we are expecting good order from Market Week USA.
• Garment sector going through reasonable business developments which are attracting buyers to come in Pakistan and place orders.