Market Report – Pakistan 18th March 2019

Local Cotton Highlights:

• Last week, in the local cotton market activity has remained good and healthy, most of the buyers were active to cover fine quality lint, in fear that quality lint will be short in the coming days. Ginners were also busy in selling their stocks with slightly improved prices, they want to dispose of their stocks to manage their financial crunch. The ginners have the stock of approx. 1 million bales which will be sold in coming days.
• During the last week, the prices of cotton remained on same levels with minor raised asking by ginners due to the hectic activity, however no major change was observed. The Karachi Cotton Association (KAC) spot rate closed on the level of Rs 8700 per maund with increased on Rs.100. ICE cotton futures rose in this week in expectation that more progress has been made in the US-China trade talks lifted investor sentiment. The market was driven by expectations that the US-China trade dispute was going to be settled. Indian cotton prices were also firm and upward due to the Indian govt measurements which are being taken to manage Indian cotton stable.
• Season of cotton is going to start in Pakistan and farmers are waiting for the govt initiative to support cotton prices and as well as measurements to increase the cotton production. Heavy rains that took place this season will help naturally in the increase of cotton production.
• 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 a day to come. Prices of cotton may increase. Up till now the ginners has limited stock of 1 million bales while the new crop will be expected to come in four to five months.
• 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 slight lower level on Monday as compare to previous week’s closing figures.
• NYCF marched upward in three consecutive sessions, later dropped in next day, while recovered again on closing and closed on positive side by the end of the week.

At last day of the week, MAY 2019 closed at 75.50 with increased of 230 points.

At last day of the week, JULY 2019 closed at 76.60 with upsurge of 216 points.

At last day of the week, OCT 2019 closed at 75.06 with rose of 99 points.

Liverpool Index:

A was opened at 81.25 with lower level from previous week’s closing figure.

• In this week Index “A” showed upward trend, except of one session in mid of week and closed on improved side.
• At last day of the week, LPI “A” closed at 84.30 with increase of 305 point as of opening figure of the week.

Crude Oil:

Crude Oil prices opened at USD 56.79 with high level as compared to last week closing figures.

• In this week crude oil price remained upward, while slightly dropped on closing, although closed on positive side at the end of week.
• In last day of the week, Crude Oil price closed at USD 58.52 with increased of USD 1.73 cents as of opening figure of week.

Pakistan Currency Exchange Rates

• In last week values of Pak rupee showed mix sentiment with minor fluctuations 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 1.33 against USD.

Local Yarn:

• Local yarn market remained firm and good business activity prevailed throughout this week ended. Buyers were busy in their regular buying and took positions to cover their yarn for upcoming days. On the other hand, suppliers were firm on prices due to good sales and no mill was carrying stock and was not have any sales pressure.
• 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 firm or will increase a bit in the upcoming weeks.
• Faisalabad trading market went slow in fine cotton, yarn counts and Viscose yarn. Payment of traders was short and they were lifting yarn as per their need only. PC and CVC counts trade were made in limited numbers with stable yarn prices by this week ended.

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

Export Yarn:

China:

• Last week, in china YARN EXPO has taken place and most of the suppliers and buyers were busy there, while no major business activity was witnessed. Both were in wait and watch mode and were checking prices. Some buyers booked yarns on current levels.
• Customers floated limited numbers of inquiries during expo a business are matured after the yarn expo. Local market prices were still on higher levels and Pakistani mills are getting good margin from local market. But mills are also trying to grab export shipments therefore business is also matured after expo.

Other Markets:

• Limited activity has been noticed in other Export Yarn Market. Prices remained stable and firm in terms of asking as spinners are comfortability booked till Early May / End May. 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. Most of the top-quality suppliers already working to find new markets to fulfil the gap of selling to Korean Market. As far as Hong Kong market is concerned, customers inquired for good quantities, however, asking for the prompt deliveries due to which very few orders were finalized. Traders were showing interest in booking good quantity. Overall Hong Kong market picked up as compare of last weeks.
• European Market remained active as compare to last two weeks and floated good number of inquiries during the start of previous week. They were interested to place the orders but very reluctant to buy the bulks. So, despite of demand, no bulk business has been materialized but certainly this market behaves better as compare to rest of the markets.
• Turkish buyers remained silent only few deals of double yarns reported on lower level of prices from the needy mills. Few inquiries of core spun and slub yarns received from Bangladesh in coarser counts. However, business was slow. Indonesian and Vietnam customers asked for specialized yarns and booked limited quantities

Local Fabric:

• The local fabric market remained firm, steady after stabilizing itself for a month and seems in buoyant mood for both narrow and wider width fabric markets.
• Moderate activity reported in the market but trading optimism may create buying interest in local fabric market. Weavers are comfortably booked till early ~mid May’19 for narrow width and wider width looms 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 1.01 per yard based on ex mills.

Export Fabric:

• Far Eastern markets are continuously going slow in term of order placements. Korean customers are just checking prices now a days and not ready to place orders because of slow demand from their end customers.
• Chinese customers were busy in attending the Yarn Expo Fair in China during the week. They have exchanged inquiries for price checking but no considerable business was noticed due to low target prices. Suppliers are keeping their prices firm due to firm market trend.
• Vietnam, Bangladesh, Thailand, Sri Lanka and Japan markets remained mixed with limited buying activity. Currently good suppliers are booked till end of April and offering early May onward deliveries whereas average suppliers are booked till mid of April and offering end April onward deliveries. Suppliers are expecting slow market sentiment in coming weeks for Fareastern markets however prices may remain firm.

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.

• European markets were also slow during the week under review. Customers from Germany, Italy and Portugal are still considering earlier offers made two weeks back thus no bulk buying was witnessed in the market. Wider width business activity was also slow during this week.
• USA market responded well as good number of inquiries were exchanged both in narrow and wider width fabric. Prices for wider width also remained stable and firm. Suppliers are offering end May ~ June deliveries in wider width due to good sales coverage.

Home Textiles:

• Home textile market was firm in last week with no significant change observed. Customers floated inquiries in the market & business maturity was good since last two 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 that period.
• European market buying was also firm & & placement were made for some new as well as repeat designs. Home textile articles prices was firm and did not see any significant change in prices.
• Suppliers have orders up to End-April, 2019, Suppliers are offering very sharp prices to capture bulk orders. 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:

• Pakistani garment industry is performing well in all the concerned areas. Being abundant in cotton resources and better-quality cotton yarns at very reasonable prices, Pakistan has a competitive advantage to get business in global markets. Garments industry companies are normally privately owned by domestic businessmen here. They are keen to develop and explore the garments business by using various strategies according to competition situations in domestic and global markets.
• There is also good potential to materialize local demand in Pakistan because generally, local companies are completely focusing on garments exports in different world markets and dealing with various brands to manufacture garments according to their requirements.
• Currently factories are booked with a reasonable number of orders in hand which are sufficient to keep the production in running. Lead times are being offered from sixty to ninety days and in some cases its upto hundred and twenty days depending upon the embellished items.

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.
• In Export Yarn China Market, it seems, that market will remain firm on same prices and buyers will keep continue in buying on these levels. In other markets business activity remained mixed as the Far eastern customers have sent limited inquiries resultant limited booking during the week. European buyers were active and suppliers got reasonable orders from Europe both in regular and specialized yarns. It is expected that yarn business will improve in days to come.
• 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 fabric market Fareastern markets are not picking up hence slow market sentiment was witnessed. Prices for both narrow and wider width was firm and expected to remain firm in coming weeks. USA market was active however limited buying was reported. Bulk program from USA market is expected in coming weeks for Institutional fabric items.
• In Home Textiles Market overall it has been firm and in coming days it seems like the situation will improve.
• 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.