Market Report – Pakistan 29th April 2019

Local Cotton Highlights:

• Last week activity has been quite good in the local cotton market. Buyers were busy in buying to cover their stocks in fear that the arrival of new crop will be late due to the late sowing. It seems that the activity will remain good in coming days as stocks of fine quality are less. The buying trend of the mills tells us that, before the start of the new season all of the cotton stock will be sold out. The old stock is diminishing with the passage of time, so the mills are not interested in losing any deal, this is the solid factor behind the price flare-up.
• The ginners were quite firm and raised their asking in anticipation of good profit margins. They had the stock of only 500,000 bales with them. Prices increased in this week by Rs 100 to 200 in the cotton market because of the good trade. The Karachi Cotton Association (KCA) spot rate gained Rs 150 within a week to Rs 9000 per maund. It seems that prices may go up slightly due to less stock behind and fear of late arrival of new crop.
• Mixed trend was seen in international cotton market after fluctuation. China hinted to import 8 lac tons bales which is approximately equal to 47 lac cotton bales while on the other hand China showed its interest of selling 10 lac bales from its old stock. The price of cotton in America remained between 76 to 78 American cents because the prices of cotton in America are linked with weather conditions and fluctuation in dollar price.
• The prices of cotton witnessed upward trend in India because of the decrease of 35 lac bales in the production target. The initial production target was 3 crore, 65 lac bales which is now 3 crore, 20 lac bales.
• For the new season 2019-20 partial sowing was started in the Lower Sindh and Punjab. Due to the rains in Punjab there is a delay in harvesting of wheat but there is a plenty of time for cotton sowing. It is expected that arrival of Phutti will be starting in the second week of June from the 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, 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 9200 per maund. Overall deals were made between the range of USC 66~79 Lbs. (7,700~9,200/ maund).

New York Cotton Futures:

• New York Cotton futures opened with slightly higher level on Monday as compare to previous week’s closing figures.
• NYCF marched downward in next two consecutive sessions, then recovered in next session, while dropped again on closing and closed on negative side by the end of the week.

At last day of the week, MAY 2019 closed at 76.75 with decrease of 44 points.

At last day of the week, JULY 2019 closed at 77.70 with decline of 77 points.

At last day of the week, OCT 2019 closed at 76.34 with drop of 111 points.

Liverpool Index:

A was opened at 88.25 with higher level from previous week’s closing figure.

• In this week Index “A” showed downward trend and at the end closed on negative side.
• At last day of the week, LPI “A” closed at 86.45 with decrease of 180 points as of opening figure of the week.

Crude Oil:

Crude Oil prices opened at USD 65.70 with higher level as compared to last week closing figures.

• In this week, Next day prices were increased, while dropped in whole week and closed on negative side at the end of week.
• In last day of the week, Crude Oil price closed at USD 63.30 with decreased of USD 2.40 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 negative note with figure of 1.12 and British Pound also closed on negative note with figure 1.29 against USD.

Local Yarn:

• Local yarn market remained stable in terms of asking and average in terms of business finalization by the end of last week. Cotton based mills were more interested to sell yarns on these price levels whereas PC/CVC based mills were short in deliveries and were expecting upward trend in yarn prices. Most of spinning mills are sold for 5~6 weeks and offering onward deliveries. On the other hand, weavers also covered yarn for their sold orders.
• 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 stable during this week and it is expected that local fiber price will remains stable in upcoming weeks.
• Faisalabad trading market reported good business activity. Prices remained firm to make good activity in staple and PC/CVC yarn, fine count 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 customer showed good business activity during this week. Customers have floated handsome numbers of enquiries against which order materialization was also good. If we analyses the market conditions, prices are expected to remain firm and stable as suppliers have good orders and their sales position is comfortable. Moreover, FTA agreement between China and Pakistan is added factor to increase sales volumes. Hence, it is expected that prices will remain in same range with minor tendency to increase and order confirmations will be witnessed as demand is coming from China.

Other Markets:

• Far eastern customers came by Middle of week and asked for general update about prices without any firm requirements. European customers floated very few inquiries and limited business has been finalized. During last few weeks most of the buyers were busy in Easter festival. So, it is expected that all pending deals will materialize in days to come but overall quietness prevailed in the market. Turkish Market is also inactive with less demand. There was limited demand of double yarns from Bangladesh market.

Local Fabric:

• Local fabric market remained steady, firm but slow activity reported in the market for both narrow and wider width fabrics.
• Buyers shared limited inquiries and subsequently negligible business observed in the market for both narrow and wider width fabric markets. Weavers are booked till early ~ mid-June in narrow width and end June for wider width and onward deliveries are available with all major suppliers.

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:

• Fareastern market are very slow in business activity. Limited number of inquiries exchanged by Korea, China and Japan however no considerable business was witnessed due to low target prices. Other fareastern markets remained quite during the week. Asking prices were firm due to continuous rise of yarn prices. Currently good suppliers are booked till end of May whereas average suppliers are booked till mid of May and offering end May onward deliveries. Suppliers did not get support from their regular customers during last couple of weeks due to slow buying. Suppliers are expecting that slow business activity may exist in next couple of weeks however prices will remain firm with upward trend.

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 markets were slow during the week under review. Limited inquiries were received from Germany, Italy and Portugal however other European markets were aside of buying. USA market was also slow during the week as no considerable activity was reported. Wider width suppliers have good orders till July hence they are in comfortable position compared with narrow width items. It is forecasted that wider width fabric business will remain good in coming days and prices will remain stable and firm.

Home Textiles:

• Home textile market was firm in last week. Customer floated inquiries in the market & maturity of business was firm. USA Market was also firm & a lot of inquiries are floated in the market but order placement was good because prices were on higher side and customer held their buying till the market got stable. European markets were also firm during the week & customers placed few orders which they required on urgent basis.
• Prices increased 3 –4% last week due to increase of cotton prices. Yarn prices are getting stable in last two days of the week and keeping in view yarn market situation it looks that the market will remain stable in this week and finished product prices will also get stable.
• Suppliers have orders up to May, 2019. 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:

• Readymade garments are one of Pakistan’s top exports. Recently, the Planning Commission approved funds for a project which aims to set up 1000 industrial stitching units under the public private partnership mode. Although that is a good initiative, there needs to be more effort dedicated towards developing the skills of small and medium enterprises operating in the garments sector. For what good are stitching units if there is a dearth of skilled labour to operate them.
• The garments sector in Pakistan does not have to start from scratch to come up with a roadmap for skills development. A good start would be to emulate the successful models in collaboration with the private sector and the donor community. A good starting place would be Sialkot and Faisalabad which both have garments clusters and can be used to kick off a pilot skills development program for the garments sector. More on this in the coming days.
• The International Apparel Federation (IAF) and Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) jointly announced holding the IAFs 35th World Fashion Convention in November 2019.  IAF Secretary General and PRGMEA Chief Coordinator said the convention would be held at a local hotel from November 11 to 13, 2019. It was aimed at opening new avenues for the domestic garment industry to collaborate with international buyers and leading global brands.

Going Forward:

• In Local Yarn Market it is expected that market will be remain stable for next week as mills are in comfortable sale zone and will resist on these asking 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, cotton prices in all the regions are also towards an upward tone and we might see the same sentiment till start of new crop. In Other markets business activity remained slow from Far eastern side. European buyers were away due to festive season and will start regular activity from this week. It is expected that yarn business will remain slow in upcoming week.
• Local fabric market is showing resistance at current level therefore firm sentiments may prevail in coming weeks.
• In Export Fabric Market another week went slow for far eastern markets however prices may remain firm with upward trend due to hike in yarn prices. European and USA markets were slow during the week and expected to remain slow in next week as well due to slow demand.
• In Home Textiles overall market was firm and in coming days it looks situation will be further improve once yarn prices stable, as per forecast market will be boost up once yarn price stable because customers hold their buying and waiting for some reduction in prices. Customers almost finalize their new season requirement but there are in wait and see conditions to place the order, once prices stable, Customer will place new orders in upcoming weeks.
• Pakistan’s Apparel’s industry has a very bright future as a lot of avenues being worked on which will pull buyers’ interest both from Europe and USA markets.