Market Report – Pakistan 25th March 2019

Local Cotton Highlights:

• Last week, trading volume decreased in the local cotton market and cautious buying of textile and spinning mills was seen because of the arrival of imported cotton to the big textile and spinning groups. Ginners demanded higher prices of good quality cotton due to which mills are buying the commodity as per their needs.
• During the last week, the prices of cotton remained firm due to the shortage of the quality lint. The Karachi Cotton Association (KCA) spot rate closed on the level of Rs 8600 per maund with decreased of Rs.100. Internationally prices were firm and upward side in anticipation of better outcomes of USA& China Trade War. Indian cotton prices were also firm and upward due to the Indian govt measures which are being taken to manage Indian cotton staple.
• The new season will start in three to four months. Ginners have the stock of 1.05 million bales out of which only half are of good quality. Moreover, due to the rains there is a delay in harvesting of wheat while according to the information received from Interior Sindh the sowing of cotton has partially started while the partial sowing season in Punjab is expected to begin next month.
• It seems that activity will remain moderate in days to come and most of the mills will focus on imported deliveries.
• 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 showed mix sentiment in whole week and moved on both ways, in last closed on positive side by the end of the week.

At last day of the week, MAY 2019 closed at 76.58 with increased of 131 points.

At last day of the week, JULY 2019 closed at 77.57 with upsurge of 116 points.

At last day of the week, OCT 2019 closed at 75.86 with rose of 64 points.

Liverpool Index:

A was opened at 83.05 with lower level from previous week’s closing figure.

• In this week Index “A” showed mix trend with and fluctuated, hence, closed on improved side.
• At last day of the week, LPI “A” closed at 84.65 with increase of 160 point as of opening figure of the week.

Crude Oil:

Crude Oil prices opened at USD 59.09 with high level as compared to last week closing figures.

• In this week crude oil price showed upward trend, while dropped on closing and closed on negative side at the end of week.
• In last day of the week, Crude Oil price closed at USD 59.04 with increased of USD 0.05 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 negative note with figure of 1.13 and British Pound also closed on negative note with figure 1.32 against USD.

Local Yarn:

• Local yarn market remained firm and good business activity prevailed another week in a row. 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 position and no mill was carrying stock and was not having any sales pressure. All mills, all counts are sold for more than 35 days and offering onward deliveries.
• 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 increase a bit in upcoming weeks.
• Faisalabad trading market shot up again in fine counts and viscose yarns by end of last week. PC yarn activity also picked up and improved rates registered last week’s trade.

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

Export Yarn:

China:

• Chinese customers remained under good business activity, customers kept on floating enquiries. Good sales were reported as most of the suppliers were also in selling mood hence, prices were matched with consent of both parties to confirm order.
• We might see handsome business activity in coming days as customers are actively checking prices. However, for next 1-2 weeks, business activity seems to be on lower side due to increase in prices from suppliers after sales coverage.
• Good suppliers are booked till end April and offering May deliveries whereas average suppliers are booked till Mid-April and offering onward deliveries.

Other Markets:

• Far eastern customers inquired by middle 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. However, since prices start raising, it is expected that all pending deals will materialize in days to come.
• Mainly deals of regular counts and few specialized yarns like mélanges were also materialized this week along with some carded p/c yarns. Turkish Market is also inactive and having with less demand.
• There is good demand of double yarns from Bangladesh market. Indian suppliers increased their asking 10~15 cents /kg during 2 weeks mainly due to the sharp fluctuation of Indian rupee against USD.

Local Fabric:

• In current week under review the local fabric market closed on firm note and moderate trading activity reported towards the end of the week. However, Its worth mentioning that on last working day weavers stopped offering due to rumors of currency devaluation.
• Major weavers are booked in narrow width till mid-May’19 whereas wider width looms are covered till end May’19 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:

• Since the market was getting firm, Far Eastern customers took buying decision towards mid of last week after very hard negotiations. Suppliers held their offers towards end of the week as the market was very uncertain. Yarn suppliers were not offering prices as they were expecting and they further increased the prices.
• Customers from China, Vietnam, Bangladesh, Thailand, Japan and Korea were interested to book their orders which they were holding since last week but could not manage because their target was low and supplier prices were increasing at a rate of 2~3% during the week.
• Good suppliers are booked till early May and offering mid-May onward deliveries whereas average suppliers are booked till end of April and offering early May onward deliveries. It is expected that business activity may remain slow during coming days and prices will remain firm with tendency of further upward trend.

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

20×16/128×60=63”, in range of 1.16 to 1.18 per yd, 16×12/108×56=63” between USD 1.26 to 1.28 per yd and 20×20/108×5863” in range of USD 0.99 to 1.00 per yd based on CNF Far Eastern ports.

• Wider width suppliers got good orders during the week thus they have extended their sales till mid of June and now offering end June onward deliveries.
• USA market was on an average tone with less inquiries resultant less orders placed in the market both on Sulzer and Air Jet looms.
• Polyester prices are also getting firm thus prices for work wear and wider width for home textile sector also increased by 2~3% during the week under review.

Home Textiles:

• No significant change observed as market remind firm last week. Customers floated a lot of inquiries in the market & but placed few good orders.
• USA Market turnover was slow because Market Week has taken place last week and customer were busy there. Due to which USA market has not been active. Now the Market Week is over so hopefully orders will start coming in.
• European markets were active last week & placements were good for some new designs as well as old ones for repeat orders.
• Home textile articles prices were on the same level since the start of this month. Although cotton price has been increasing compared to last week, but suppliers were offering same prices as they quoted since the beginning of the month to capture continuing business.
• Suppliers have orders up to End-April, 2019 but they are still under sales pressure to fulfill their capacities at 100% for which they are looking forward to efforts developed in newer markets. As far as shipments are concerned suppliers are offering 65 to 70 days for new orders & for repeat orders supplier are offering 50 to 65 days.

Garments:

• The Apparel industry in Pakistan is playing a vital role in value addition of textile sector. In the export field, the knitwear industry of Pakistan has managed to make a big name in many countries of the world.
• Globally, the ready-made garments industry is regarded as a buyer driven value chain whereby retailers and brands decentralize the production processes. The production of goods takes place in the developing countries and decisions as regards what to produce, where to produce and the price are determined by retailers located in the developed countries.
• There is greater reliance on the development of this industry as there is substantial value addition in the form of knitwear. The capacity utilization of this sector is approximately 70% and besides locally manufactured machinery, liberal import of machinery under different modes and increase capacity will increase the exports.
• Pakistan is exploring new potential markets in different regions to increase its exports. The government accords top priority to enhance country’s exports and achieve its trade targets set for the current financial year. In the European Union (EU), Pakistan has a huge opportunity for exporting different products.

Going Forward:

• In Local Yarn Market it is expected that market will be remain firm and upward, 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 next price levels.

• In Export Yarn China Market, prices are expected to remain stable and order materialization will be made with negotiation of prices as per last placed orders prices. Where as in other markets business activity remained slow as Far eastern customers and European buyers were seeking lower prices. Their response was slow in term of order finalization. However, after the rise in prices by the suppliers. Most of the buyers improved their bids and finalized orders. It is expected that yarn business will further pick up in the upcoming week.

• The Local Fabric Market receiving signal of slow market sentiments for coming weeks therefore it’s expected that market will move in a band with fluctuation of 1~2% on either side.
• In Export Fabric Market the Far Eastern customers booked bulk orders in the mid of the week after observing increase in price trends. European customers have booked limited quantities as bulk was not possible to manage due to difference of target and offered prices. USA market remained mixed. It is expected that business may remain slow however price negotiation will be tough in coming days after increase in raw material prices.
• In Home Textiles Market the forecast looks better for the coming days, the situation is to improve further and reasonable growth is expected in orders received from both main regions that is Europe and USA.
• The readymade Garment segment is the highest value-added link in the entire textile value chain in Pakistan and is consistently growing from the last two decades and will witness a significant growth in the coming weeks.