Market Report – Pakistan 15th April 2019

Local Cotton Highlights:

• Last week, local cotton market-maintained demand for fine variety. Sustained demand amid tight supply may push the rates further higher, but within a slight pace. Cotton yarn is in demand these days and it seems that despite short supply of fine variety, buyers are keen to finalize deal at the present levels. Ginners have only six lac bales of cotton, so they are trying to gain profit as much as they can.
• The prices of cotton increased from Rs 100 to 200 per maund. The Karachi Cotton Association (KCA) increased the spot rate price by Rs 100 per maund and closed it at Rs 8800 per maund.
• In other markets the prices of cotton remained stable in China. But increased in India in the starting of the week but showed slight downward trend at the end of the week. According to experts the prices of cotton will increase in India because Cotton Association of India has estimated the cut of 700,000 bales in production estimate. According to the association 3 crore 21 lac bales will be produced.
• The sowing of cotton in Lower Sindh and in Multan, Pakistan has started partially for the next season. The agriculture department is actively working towards increasing the production of cotton; especially in Punjab and the government has given incentives to the farmers of cotton which shows that government is taking interest in increasing the production of cotton.
• It seems that the activity will remain good in days to come due to the shortage of fine quality lint.
• 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, which is available in small quantity. Prices of lint for the crop (2018/2019) from Sindh was in range from Rs 7700 to Rs 9000 per maund (37.32 Kgs), while the lint prices from Punjab reportedly ranged from Rs 7800 to Rs 9100 per maund. Overall deals were made between the range of USC 66~78 Lbs. (7,700~9,100/ maund).

New York Cotton Futures:

• New York Cotton futures opened with higher level on Monday as compare to previous week’s closing figures.
• NYCF marched downward in this week, while recovered on last session, hence, closed on negative side by the end of the week.

At last day of the week, MAY 2019 closed at 78.11 with decrease of 81 points.

At last day of the week, JULY 2019 closed at 78.86 with drop of 14 points.

At last day of the week, OCT 2019 closed at 78.68 with upsurge of 109 points.

Liverpool Index:

A was opened at 86.90 with slight upward level from previous week’s closing figure.

• In this week Index “A” showed upward trend in two sessions, later dropped in next two sessions and closed on positive side.
• At last day of the week, LPI “A” closed at 87.20 with increase of 30 point as of opening figure of the week.

Crude Oil:

Crude Oil prices opened at USD 64.40 with upper level as compared to last week closing figures.

• In this week crude oil price showed mix to downward trend and closed on negative side at the end of week.
• In last day of the week, Crude Oil price closed at USD 63.89 with decreased of USD 0.51 cents as of opening figure of week.

Pakistan Currency Exchange Rates

• In last week values of Pak rupee was stable 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 closed on negative note with figure 1.31 against USD.

Local Yarn:

• Local yarn market remained stable in term of asking and average in term of business finalization by the end of last week. Prices already touched maximum levels and activity became slow on these price levels. All mills are interested to work on these price levels as no one is carrying stocks, and want to book forward sale. On the other hand, weavers turned away from buying due to a high jump in prices.
• PSF price remained stable during this week ended in domestic market. PTA, MEG and Crude oil prices gradually increased from last two weeks. Import price for fiber remained slow during this week and it is expected that local fiber price will remains stable in upcoming weeks.
• Faisalabad trading market reported slow business activity. Most of trader was getting dispatch and making their sales in this week. Prices remained stable to slow activity in staple and fine count yarns. PC/CVC yarn activity reported average during this week with stable prices.

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

Export Yarn:

China:

• Chinese customers showed good business activity and kept on floating enquiries. Overall demand is good from china as customers are interested to place orders. They were active till mid-week and floated good inquiries and orders.
• On the other side, suppliers have increased their prices for almost 3-5% against which customers are resisting. Major reason for such increase in prices is upward trend of cotton in domestic as well as international market. Moreover, prices in domestic market are flared up and customers are buying at higher levels as well.
• It is expected that prices will remain firm with tendency to further rise up.

Other Markets:

• Limited activity has been noticed in Export Yarn other markets. Prices remained stable and firm in term of asking as spinners are comfortability booked till End May / June.
• In Far Eastern markets, Korean customers remained quiet with no major activity. As far as Hong Kong market is concerned, customers inquired for limited quantities, few orders were finalized. Traders were showing interest in booking limited quantity. Overall Hong Kong market remained slow as compare of last weeks.
• European Market remained less active as compared to last week and floated limited 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 the demand, no bulk business has been materialized.
• 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:

• Week closed with slow activity in the local fabric market for both narrow and wider width fabrics. Limited inquiries received by the weavers and week closed with negligible business materialization in the market. Weavers raised their asking prices by 1% due to multiple factors.
• Currently weavers have booking in hand for next 50-70 days therefore they are at comfortable level at this moment for both narrow and wider width looms and not showing any panic

Local fabric prices of regular items are as follows:

20×16/128×60=63”at USD 1.18 to 1.20 per yard, 16×12/108×56=63” in range of USD 1.27 to 1.29 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:

• Limited inquiries were received from Far Eastern countries. Korean, Chinese and Japanese customers exchanged inquiries resultant limited business was materialized. Bangladesh, Vietnam, Thailand, Malaysian customers remained aside of buying during the week under review.
• Asking prices further increased by 2~3% due to hike in yarn prices. Currently 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 onward deliveries.
• It is expected that prices may remain stable with firm tone however business activity may remain average in coming days.

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.

• European customers have sent limited number of inquiries during the week thus limited business was reported. Germany, Italy and Portugal markets were little bit active however France, Spain and other European markets were slow.
• USA buyers were active and booked good quantities in T-180 ~ T250 mainly in wider width.
• Wider width suppliers are comfortably booked till end of June and offering July onward deliveries. Most of them even offering Aug deliveries. Suppliers are expecting that European and USA market will further improve in coming days however prices will remain stable and firm.

Home Textiles:

• Home textile market was firm during last week. Customer floated inquiries in the market but maturity of business was on lower side as compared to the last week.
• USA market was firm & a lot of inquiries were floated in the market but order placement was not at expected levels because prices were on a higher side and customer held their buying till the market gets stable. European markets also remained firm during the week & customer placed few orders which they usually require on urgent basis.
• Prices were increased 3 – 4% last week due to increase of cotton prices. Whereas yarn prices started to get stable in the last two days of the week and keeping in view yarn market situation, it seems that market will get stable during this week resulting in stable prices of finished products.
• Suppliers have orders up to Mid-May, 2019 but suppliers are under sales pressure to fulfill their capacities at 100%, they are trying to get more orders from different customers / markets. As far as shipments are concerned suppliers are offerings 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. Globally, the ready-made garments industry is regarded as a buyer driven value chain whereby retailers and brands decentralize the production processes.
• Recently Pakistan’s biggest textile exhibition at government level, TEXPO-2019, (April 11-April 14) has not only proved instrumental in further highlighting Pakistan’ s soft image to the world but also attracted initially 600 million dollars trade through export orders by foreign buyers.
• During the fair foreign buyers also inked 10 memorandums of understanding with local export houses, besides visiting field and industrial units in Lahore, Sialkot and Faisalabad. Furthermore, The International Apparel Federation (IAF) and Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) on Friday jointly announced holding the IAFs 35th World Fashion Convention in November 2019 which would be another step taking apparel industry further high.

Going Forward:

• In Local Yarn Market it is expected that market will be remain stable for next week as mills are in comfortable sales zone and will resist on these asking levels. 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 has been noticed that business activity since last one month is picking up from all regions. This is giving support to suppliers and customer both in terms of making business profits. 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 also remained less active and confirmed limited orders.  It is expected that yarn business will remain slow in days to come mainly as Easter Holiday are coming during this month.
• Local Fabric Market may tend to remain slow for another 2-3 weeks.
• In Export Fabric the Far Eastern markets remained mixed with limited business activity. Prices were further increased by 2~3$ due to hike in yarn prices. European markets were slow however USA market was active. Prices are expected to remain stable and firm in coming days and business activity may remain in average.
• In Home Textiles the market has remained firm but in coming days it looks as if the situation will further improve once yarn prices get stable.
• The readymade garment segment is the highest value-added link in the entire textile value chain in Pakistan and is consistently growing.