Market Report – Pakistan 1st April 2019

Local Cotton Highlights:

• Last week, modest trading activity was seen in the local cotton market, most of the needy buyers were interested in buying. Sharp rise in dollar /interest rate and the news of further increase in the prices, propelled the buyers to keep buying.
• Ginners’ showed interest in selling the cotton on these prices, they rose prices of low-quality cotton due to increase in demand, on the other hand some leading mills are also focusing on imported cotton to cover their future requirements. Stock of 8 lac 50 thousand bales was left with ginners
• 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 the same previous level. ICE cotton futures rose more than 2 percent on Friday as a report from the US Department of Agriculture (USDA) showed a drop-in acreage for the natural fiber in 2019. Internationally prices were firm and on the upward side. Indian cotton prices were also firm and upward as China booked handsome quantity of cotton from India.
• New session of cotton sowing couldn’t properly start due to the rainy weather, partially sowing of cotton has started in lower Sindh. Full sowing of cotton will start in the areas where harvesting of wheat will be completed. The agriculture department is working hard to increase the production of cotton as Prime Minister Imran Khan has expressed his resolve towards increasing the production of cotton by 15 million bales. The Punjab government is working harder to increase the production of cotton and the government functionaries are conducting seminars to raise awareness among the farmers regarding increased cotton production. The production of cotton in Sindh is satisfactory and it is expected that production of cotton will increase because last year’s cotton crop in lower Sindh was affected due to shortage of water. It is expected that this year there will be no shortage of water in lower Sindh.
• 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 3500 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 67~76 Lbs. (7,700~8,800/ maund).

New York Cotton Futures:

• New York Cotton futures opened with higher level on Monday as compare to previous week’s closing figures.
• NYCF rose in next day and later dropped in two sessions, while recovered on closing session, although closed on negative side by the end of the week.

At last day of the week, MAY 2019 closed at 77.61 with decrease of 12 points.

At last day of the week, JULY 2019 closed at 78.31 with reduce of 20 points.

At last day of the week, OCT 2019 closed at 75.98 with down of 17 points.

Liverpool Index:

A was opened at 86.40 with slight lower level from previous week’s closing figure.

• In this week Index “A” showed mix trend with and fluctuated on both ways, at last closed on negative side.
• At last day of the week, LPI “A” closed at 86.03 with decrease of 37 point as of opening figure of the week.

Crude Oil:

Crude Oil prices opened at USD 58.82 with lower level as compared to last week closing figures.

• In this week crude oil price rose in next session an dropped in next two sessions, later recovered on closing and closed on positive side at the end of week.
• In last day of the week, Crude Oil price closed at USD 60.14 with increased of USD 1.32 cents as of opening figure of week.

Pakistan Currency Exchange Rates

• In last week values of Pak rupee depreciated 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 jumped and price hiked in all cotton yarn counts. Buyers were busy in their regular buying and took positions to cover their yarn for upcoming days against sold fabric order. On the other hand, suppliers were firm on prices due to good sales position and no mill was carrying stock and was not have any sale pressure. All mills, all counts are sold more for 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 the upcoming weeks.
• Faisalabad trading market shot up again in fine counts and viscose yarn by this week ended. PC yarn activity also picked up and improved rates registered in this 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 as customers kept on floating enquiries. Good sales were reported as most of the suppliers were also in the selling mood hence, prices were matched with consent of both parties to confirm order. We might see handsome business activity in days to come as customers are actively checking prices.

Other Markets:

• Korean and HK market remained dull and inactive, and most of the big brands were unable to book sufficient quantities, since Koreans are more interested to buy fabrics instead of yarns. Another yarn which was once quite active in Korea, the Zero Twist is also having less demand now a days. Overall these markets were responding really slow mainly for Pakistan.
• Indonesian market floated few inquiries in fine counts and double yarns. However, buyers were more interested to book other origins then Pakistan due to duty structure.
• European customers floated limited level of inquiries and nominal business has been finalized. There is an overall less activity in EU market as most of the traders are carrying stocks and only buying in chunks. Moreover, after the rise in prices they became more hesitant to take a firm decision. However, some customers confirmed the orders expecting that rates may further flare up keeping in view current situation. Limited deals of double and p/c yarns were reported.
• Bangladesh market also respond very well. However, Turkish Market was inactive with less demand.

Local Fabric:

• The local fabric market stalled and slowed down in current week under review due to looming fear of currency devaluation and increasing trend of cotton on international front.
• Prices increased by 2~3% due to increase in yarn prices and therefore negligible business materialization reported in the market for both narrow and wider width fabrics with mid-May onward and end may/early June’19 onward deliveries respectively.

Local fabric prices of regular items are as follows:

20×16/128×60=63”at USD 1.17 to 1.19 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 0.98 to 1.00 per yard based on ex mills.

Export Fabric:

• Far Eastern markets remained aside of buying during the week due to slow demand. Few numbers of inquiries were received from Korea, China and Indonesia but no bulk buying was noticed due to increase in fabric prices.
• Suppliers have raised their prices by 3~4% during the week due to increase in raw material prices. It is expected that fabric prices will remain firm in coming days however business activity also may remain slow. Currently good suppliers are booked till mid of end of May and offering early ~ mid-June onward deliveries whereas average suppliers are booked till mid of May and offering end May onward deliveries.

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

20×16/128×60=63”, in range of 1.18 to 1.20 per yd, 16×12/108×56=63” between USD 1.28 to 1.30 per yd and 20×20/108×5863” in range of USD 1.00 to 1.02 per yd based on CNF Far Eastern ports.

• European customer has exchanged limited number of inquiries both in narrow and wider width. Asking prices were increased by 2~3% due to sudden increase in yarn prices. Limited number of inquiries were received from USA market resultant limited business was reported in basic T-180~T250. Suppliers are expecting slow business activity in next week however fabric prices may remain stable and firm.

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:

• Pakistan apparel industry appears reacting to circumstances and reacting well as this time the reflection is scarce in the high-speed fashion industry. The industry is setting the required productivity tone by ensuring quick response, competitive prices structure, maximum efficiency and yield and all newness on induction of skills and mechanics.
• Being in the process of now does no longer exist and phase has been over. This change is at the core of fashion business. This market phase could help to give Pakistan apparel industry the renewed strength, putting on a developmental path having huge growth potential.
• Factories at the moment are running in their full capacities and offering sixty days lead time for basic articles. Fashion articles with embellishments are being offered from eighty to ninety days.

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 price level.
• In Export Yarn Market China market prices from supplier’s end are expected to increase as there is very good demand from domestic market as customers are booking bulk quantities of course counts even by paying higher prices. In other market business activity remained mixed as the Far eastern customers have sent limited inquiries resultant limited booking during the week. European customers concluded limited business after the increase in prices. But business is bound to increase as there is a significant demand on buyer’s part.
• The Local Fabric Market outlook remained firm and bullish in trend and is expected to prevail for coming weeks.
• The Export Fabric Market remained slow with negligible business activity however fabric prices increased by 3~4% due to hike in yarn prices. It is expected that prices may remain stable and firm however business activity may remain slow as well.
• 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.
• Garment sector of Pakistan is working on fashion articles and responding well to demands of different brands. This may lead towards further bulk order placements in days to come.