Market Report – Pakistan 11th March 2019

Local Cotton Highlights:

• Last week, buying interest persisted in the local cotton market as mills and spinners were keen to make new deals at the present levels. They were trying to cover fine quality lint despite the fact that apparently tension has eased with India. Government is also taking initiatives to achieve desired total production and variety of cotton, for the coming season 2019~2020.
• Ginners also showed softness and were busy to minimize their stocks on same levels. Ginners were expecting more profits but now they are trying to sell maximum to settle their financial positions.
• During the last week, the prices of cotton largely remained stable during the week over and no major change was observed. The Karachi Cotton Association (KAC) spot rate closed on the level of Rs 8600 per maund. The world leading cotton markets were mixed to steady.
• India has signed contracts to ship 800,000 bales of cotton to China. Chinese buyers were very active in the market in last few days. The cotton was sold at around 80 to 81 cents per pound on a cost and freight basis (C&F) to China. India has already shipped around 600,000 bales to China so far in the 2018/19. Imports for china are nearly 10 cents (per lb) cheaper than domestic supplies for Chinese buyers. China has also been buying cotton from Brazil in the last few days due to depleting stocks. Cotton ending stocks in China are forecast at 6.58 million tons in 2018/19, down from 7.43 million tons.
• In Pakistan arrival of phutti (seed cotton) from cotton fields into ginning factories has slowed down as the third and final picking is also fast reaching its end. New crop sowing expected by early April onward.
• Pakistani have ordered around 600k bales of cotton from India and now onward its import seems to be viable after the easy situation on both countries. They have booked 800k bales from USA and delivers are on the way.
• There were some speculations in the market about the further rise of Dollar, therefore local mills showed interested to buy maximum cotton from local market on same price levels. So, it seems that activity will remain good in day to come.
• 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 7700 to Rs 8700 per maund (37.32 Kgs), while the lint prices from Punjab reportedly ranged from Rs 7800 to Rs 8800 per maund. Overall deals were made between the range of USC 68~77 Lbs. (7,700~8,800/ maund).

New York Cotton Futures:

• New York Cotton futures opened with lower level on Monday as compare to previous week’s closing figures.
• NYCF rose in next session, later dropped in two consecutive sessions and recovered slightly on closing, hence closed on positive side by the end of the week.

At last day of the week, MAY 2019 closed at 73.49 with increased of 36 points.

At last day of the week, JULY 2019 closed at 74.63 with upsurge of 54 points.

At last day of the week, OCT 2019 closed at 73.99 with upsurge of 30 points.

Liverpool Index:

A was opened at 80.85 with improved level from previous week’s closing figure.

• In this week Index “A” showed mix trend in this week, although closed on improved side.
• At last day of the week, LPI “A” closed at 82.25 with increase of 140 point as of opening figure of the week.

Crude Oil:

Crude Oil prices opened at USD 56.59 with high 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 56.07 with decreased of USD 0.52 cents as of opening figure of week.

Pakistan Currency Exchange Rates

• In last week values of Pak rupee showed stability 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 1.12 and British Pound also closed on negative note with figure 1.30 against USD.

Local Yarn:

• Local yarn market remained stable in term of asking with average business activity prevailed in market. Most of spinners are sold for 30days and above, so the price they calling, remained firm and sale made on same rates. 30/1cd and 40/1combed activity was good from last week which given some price edge to spinners as compare to other counts in sale as well.
• PSF price 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 price will remains stable and firm.
• Faisalabad trading market was active for fine counts and massive season end buying with highest price of this quarter reported. Viscose yarn season also started and price improved with good activity whereas pc yarn prices remained stable by this week ended.

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

Export Yarn:

China:

• Export yarn China market business activity was on overserved being at a normal pace. Buyers booked some yarn on today price levels. Hence, many of the buyers and spinners held their deals because of the Yarn Expo taking place in China.
• Customers floated limited numbers of enquiries and did minimal business confirmations. Local market prices were still on higher levels and mills are getting good margins from local then export market. So, they are showing more interest in grabbing local orders rather to book export shipments.
• Now most of suppliers are in china for yarn expo in current week, it is expected that further orders confirmations will made during the fair.

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. On the other hand, there is an improved activity from Vietnam and the Indonesian market. HK, customers came by the end of week and asked for general update about prices along with some firm orders of double yarns.
• European customers floated reasonable level of inquiries and limited business has been finalized. As, Eu most potential market Portugal was closed for Carnival and customers resumed work in the middle of week. During last few weeks most of the buyers were busy in floating inquires with very low bids. Moreover, buying in chunks were overserved. Since activity is slow in Eu.
• Many deals of specialized yarn like Slub yarns and mélanges were also materialized this we. Turkish Market is also inactive with less demand.

Local Fabric:

• Local fabric market moved on steady footing throughout the week though business volume dropped considerably for both narrow and wider width fabrics.
• Weavers continued to offer prices with steady tome but with a slight hint of upward asking prices due to their comfortable level of booking. Narrow width looms are booked end April~early May’19 and wider width looms are booked till mid ~3^rd week May and offering onward deliveries.

Local fabric prices of regular items are as follows:

20×16/128×60=63”at USD 1.19 to 1.21 per yard, 16×12/108×56=63” in range of USD 1.26 to 1.28 per yard and 20×20/108×58=63” was sold in range of USD 0.99 to 1.00 per yard based on ex mills.

Export Fabric:

• Slow market sentiment was noticed from all sectors of Far Eastern side. Limited number of inquiries were received from Korean, China and Japan whereas other markets remained almost quiet. Prices remained firm due to firm of raw material prices. Due to good business activity during last couple of months, suppliers have good sales coverage hence they are offering end April onward deliveries. It is expected that business activity may remain slow in Far eastern markets however prices will remain firm and stable.

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

20×16/128×60=63”, in range of 1.14 to 1.16 per yd, 16×12/108×56=63” between USD 1.24 to 1.26 per yd and 20×20/108×5863” in range of USD 0.96 to 0.98 per yd based on CNF Far Eastern ports.

• Comparatively slow business activity was seen during the week from European customers. There were various inquiries for bulk orders in last week which are still under negotiation and hopefully will finalize during next week. Wider width business activity was good during the week under review. Prices for wider width also stable without any change and offering mid ~ end May onward deliveries. There was good activity from USA market resultant limited order booking with Sulzer and airjet units. Suppliers are expecting average kind of business activity both from USA and European in coming days.

Home Textiles:

• Home textile market was firm in last week. Customers floated inquiries in the market & ratio of maturity of inquiries are little bit good as compared to the last weeks. USA Market was slow in 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 new trends which supplier present during market week.
• European markets buying was also firm & business maturity was goods as compared to the last two weeks including prices. Suppliers were offering good prices to capture the orders due to slow activity. 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.
• 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:

• The development flows have been increased recently and customers have placed sizeable volumes with factories in Pakistan. Some orders of embellishment-based articles are finalized even with an increase of 4-5% price level compared with last 3-4 months prices.
• Lead time is being asked from 60 to 120 days now depending upon the type of the garments. 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.
• While country’s core performance has already been recognized in setting up standards on material performances, washings etc, the industry is foreseeing to set up pace for 3S’s concept Speed, Skill and Sustainability to secure significant position in manufacturing game. An increase in new customers have been seen from Europe and United States.

Going Forward:

• In Local Yarn Market it is expected that market will be remained 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.
• In Export Yarn Market business activity remained slow as European customers were Partially available during the week. European buyers were seeking lower prices. So, their response was slow in term of order finalization. It is expected that yarn business will remain slow in upcoming week.
• In Local Fabric Market future outlook may tend to remain steady and optimistic for coming weeks for all fabric widths.
• In Export Fabric business activity remained slow during the week from Fareastern markers. USA market was active and placed limited orders however European customers were slow. It is expected that business activity may remain average and prices will remain stable and firm in coming days.
• In Home Textiles Market overall market was firm and in coming days it looks situation will be improve, as per forecast market will boost up and customers will make decisions to buy in bulk quantities.
• The Garment industry has accepted a tremendous growth in their business as they have proven to the Global customers that challenges of timely delivery and quality products can be met from and sustained in Pakistan.