Market Report – Pakistan 8th April 2019

Local Cotton Highlights:

• Last week, in local cotton market demand from buyers increased. The upward trend of USD and shortfall of cotton arrival propelled mills to keep buying quality cotton. Deprecation of Rupee was also the major reason behind the increased activity, mills were giving priority to the local market for cotton buying.
• Due to the demand, ginners raised asking prices because they do not have enough stocks to sell. Expecting better profit in a day to com. ginners have only six or seven lac bales of cotton, so they are trying to gain as much profit as they can.
• The Karachi Cotton Association (KCA) increased the spot rate price by Rs 100 per maund and closed it at Rs 8700 per maund. Over all the trading was done in low quality cotton due to which the prices of cotton increased by Rs 200 to 300 per maund. while the prices of good quality cotton increased by Rs 100 to 200 per maund.
• According to the weekly USDA report the export of cotton was increased by 47 % due to which the prices of cotton increased in New York Cotton Market while in the Indian cotton market the prices of 356 kg Candi was increased by Rs 1200~1500.
• PCGA reports the production of cotton was 10.77 million bales till April 1, 2019 showing a shortfall by 6.9 percent compared to corresponding period of last year. New session of cotton sowing couldn’t properly start, hence some area of Punjab has started its activity, while Sindh sowing has already started couple of weeks back.
• It seems that the activity will remain good in days to come, if dollar continues its surge.
• 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 8900 per maund (37.32 Kgs), while the lint prices from Punjab reportedly ranged from Rs 7800 to Rs 9000 per maund. Overall deals were made between the range of USC 66~78 Lbs. (7,700~9,000/ 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 dropped in next two days and later recovered in two sessions, so closed on positive side by the end of the week.

At last day of the week, MAY 2019 closed at 78.25 with increase of 89 points.

At last day of the week, JULY 2019 closed at 78.59 with rose of 38 points.

At last day of the week, OCT 2019 closed at 77.29 with upsurge of 84 points.

Liverpool Index:

A was opened at 85.30 with lower level from previous week’s closing figure.

• In this week Index “A” took jump in next two sessions, later dropped but closed on positive side.
• At last day of the week, LPI “A” closed at 86.65 with increase of 135 point as of opening figure of the week.

Crude Oil:

Crude Oil prices opened at USD 61.59 with lower level as compared to last week closing figures.

• In this week crude oil price showed mix to steady trend and closed on positive side at the end of week.
• In last day of the week, Crude Oil price closed at USD 63.08 with increased of USD 1.49 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 positive note with figure of 1.12 and British Pound closed on negative note with figure 1.31 against USD.

Local Yarn:

• Local yarn market remained firm and upward for another week in a row. Panic situation for currency devaluation caused increase in prices of yarn in domestic market. Buyers were forced to buy at seller’s rate for their urgent need to feed their looms. No bulk buying of yarn reported on these prices from any segment.
• 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 stable during this week and it is expected that local fiber price will remains firm or bit increase in upcoming weeks.
• Faisalabad trading market reported average business activity. Fine counts and staple yarn prices remained stable and sale remained slow by end of this week. PC and CVC yarn were in good demand and reasonable activity has been reported.

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

Export Yarn:

 China:

• Chines customer remained active till mid-week and floated good numbers of enquires. However, mid-week onwards, there were holiday in china so, activity was quite dull. Over all prices were showing a rising trend and kept on increasing after confirmation of business. In response to that, customers also showed increase of 1-2% in prices and booked few quantities.
• However, now the activity is at halt as suppliers’ prices are increasing by 4-5% and customers are under wait and see. Major reason for such increase was very good demand at higher prices from local market which kept suppliers busy in seals. Moreover, cotton prices are also showing upward sentiment.

 Other Markets:

• Reasonable activity has been noticed in Export Yarn Market. Prices remained firm and suppliers were not showing softness due to good number of bookings including upward trend of cotton and currency fluctuation against US Dollar.
• Korean customers floated limited inquiries and very few deals of top-quality brands have been finalized. Demand is dull in Korea at the moment. From Hong Kong market, Customers asked for prices for some big orders, however decision has not been made. Few deals were reported in double yarns only.
• European Market, customers remained active and started floating good level of inquiries at the start of last week. Activity was much improved in comparison of previous to the last week. Customers wanted to place the orders, however, according to them existing price levels are quite on a higher side, eventually they have placed only limited quantity orders. And apparently, there is no logical reason for the drop-in prices as all factors are supportive to maintain the existing price levels. From EU deals were mainly reported in specialized yarns like ZERO twist, Mélanges and Organic yarns.  Some deals of coarser counts are still under discussion which will hopefully be confirmed by next week.
• Bangladesh market which is a potential and a significant market at the moment where Pakistan is not the priority of Bangladeshi buyers due to long transit time and other custom related hurdles for the Pakistani origin items. Their 1^stpreference is still their own spinning due to the benefit of rebate and if they further need anything the will prefer to go to India as 2^nd option for buying Yarns.
• Indian suppliers increased their asking 10~15cents/kg during last week because similar to Pakistan their domestic market responded very well along with the good demand by the Chinese customers. Moreover, Indian Cotton has tremendous raised in last 2 weeks even at the level of INR 46,000/candy cotton is not available.

Local Fabric:

• The local fabric market faces more uncertainty owing to high volatile currency market and also due to unstable yarn market. Resultantly local fabric market moved around ifs and buts and week closed @ approximately 3% higher price level as compared to last week.
• Weavers confirmed limited numbers of orders at increased price level against good flow of inquiries. Currently weavers are booked in narrow width till 3^rd week May ~ End may’19 and wider width looms are booked till mid June ~ 3^rd week June’19 and offering onward deliveries.

 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 was mixed during the week. Customers have booked bulk orders which they were holding since last couple of weeks. Other customers from China, Indonesia, Bangladesh and Japan also booked limited quantities with anticipation that prices will not came down in coming weeks.
• Asking prices increased another 4~5% towards the end of the week due to increase of yarn prices influenced by the expected further increase of dollar rate against Pak rupee. Good suppliers are booked till end of May and offering early June onward deliveries whereas average suppliers are booked till mid of May and offering end May onward deliveries.
• Suppliers are expecting that fabric prices will further increase in coming days because cotton growing neighboring countries like India and China also increased their prices.

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

20×16/128×60=63”, in range of 1.22 to 1.24 per yd, 16×12/108×56=63” between USD 1.32 to 1.34 per yd and 20×20/108×5863” in range of USD 1.04 to 1.06 per yd based on CNF Far Eastern ports.

• Limited number of inquiries were received from various parts of European union. Customers from Germany, Portugal and Italy has placed limited orders in narrow and wider width fabric. Wider width fabric prices also jumped up 4~5% during the week due to increase of yarn prices.
• It is expected that fabric prices will continue rising up in coming weeks due to unstable currency and increase in raw material prices. Wider width suppliers also got some orders from their regular customers from Europe at 3~4% higher than last week.
• Customers have started accepting prices as they also understanding that it is not possible to get fabric on lower prices at the moment. Good suppliers for wider width are booked till end of July and offering Aug deliveries whereas average suppliers are booked till end of June and offering July onward deliveries.
• USA market was active during the week as good number of inquiries were exchanged however limited orders were booked both in narrow and wider width fabric. Some bulk orders are still under discussion which may finalize by early next week.

Home Textiles:

• Home textile market was quite active last week. Customer floated good inquiries in the market & maturity of business was goods as compared to the last week.
• USA Market was also active & a lot of inquiries floated in the market and order placements were better as customer placed orders for their running and new collections.
• European markets were also active during the week & business maturity was good.
• Prices were up 3 –4% due to an increase of cotton prices. Cotton prices are up since last week and new cotton prices will affect the ready goods prices because yarn prices increased as well whereas Rupee devaluation will bring great benefit for foreign buyers in the coming days.
• Suppliers have orders up to Mid-May, 2019. As far as shipments are concerned supplier are offering 65 to 70 days for new orders & for repeat orders supplier are offering 50 to 65 days.

Garments:

• During the past few years, the segments of knitwear and selected items of ready-made garments have shown an appreciable rising trend in exports. The use of knitwear (hosiery) has increased primarily due to its low price, as compared to cotton woven shirts due to easy-to-wash nature.
• The knitwear goods exported from Pakistan are known for their fine quality in European and American markets. It is a highly value-added item, earning much valuable foreign exchange, as per kg cotton converted into finished garments fetches better margins.
• A series of new finishing processes have been incorporated with improved shades, texture and lustre. Some of the bulk export items, which have gained popularity, are 100% cotton T-shirts, vests, slips, children’s pyjama suits, sports shirts, undergarments, bathing suits, knitted garments and knitted tabular or flat fabrics.
• Currently factories are showing great concern to grab further orders to continue their stitching lines, hence offering attractive prices. Lead time is being offered from sixty days to ninety days in general.

Going Forward:

• In local yarn market it is expected that market will be remain firm for this week, but prices already touched maximum level. 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 is expected that prices will remain firm and stable but with the tendency to increase further.
• The Local Fabric Market has bullish sentiments and may continue to grip the local fabric market for coming weeks.

• In Export Fabric Market, limited business for fabric was recorded during the week however prices jumped up by 4~5% due to increase of raw material prices and uncertain currency situation. It is suggested to place the orders as per current market prices otherwise the prices will further increase in the coming days.
• Home Textiles Market was good and in coming days it looks situation will be further improve, as per forecast market will boost up because USA customer are near to finalizing their new season requirements, once requirements are finalized, USA customers will place more orders in the upcoming weeks.
• For Pakistan’s garment industry many brands are finding great success with Pakistan’s expertise and local talent. For them, it is of highest importance and bonus to product design, allowing the customer to gain valuable design inputs.