Market Report – Pakistan 6th May 2019

Local Cotton Highlights:

• Last week, activity was slow in the local cotton market. Buyers were kept on sidelines and didn’t show interest in buying. Most of the buyers had covered their immediate requirements for the next two or three months and will wait for the new crop arrivals. The Month of Ramadan is ahead and it seems that moderate business behaviors will also be observed during this month due to shorter work timings.
• The ginners were firm because of few stocks left behind and were in expectations of earning more profit. But demand hasn’t supported them well during last week. They are left with a stock of 500,000 bales. In local cotton market, prices decreased from Rs 100 to Rs 200 per maund due to less interest of the buyers. The Karachi Cotton Association (KCA) spot rate also dropped Rs 200 within a week to Rs 8800 per maund.
• Downward trend was seen in international cotton market. Last week bearish trend has been observed. The New York Cotton Rate decreased due to the weather conditions in Texas, which is the biggest cotton producing state of America. Moreover, the price of dollar increased and overall reduction was witnessed in export of cotton as compared to last week.
• Bearish trend was also observed in the Chinese cotton market. China has announced to sell one million ton of cotton from its reserves while on the other hand announced to import 8 lac tons of cotton. The prices of cotton witnessed upward trend in India because the produce of cotton is 35 lac bales less from the initial target of 1 crore 65 lac bales. But for the last two weeks the prices of cotton showed downward trend and we can say that mixed trend was seen in Indian Cotton Market.
• For the new season 2019-20 sowing of cotton has started partially in Sindh and Punjab. According to the received information the sowing area of cotton will be more this year as compared to last year. Although until now the government fails to determine the support price of cotton. Support price of the cotton should have been announced immediately as the sowing has already started. The announcement of the support price by the government will encourage farmers and they will try to increase the production of cotton. The news regarding the announcement of government of fixing the support price of Phutti/cotton seed at Rs 3500 to 4000 per 40 kg is in the market.
• 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 9000 per maund. Overall deals were made between the range of USC 67~78 Lbs. (7,700~9,000/ maund).

New York Cotton Futures:

• New York Cotton futures opened with lower level on Monday as compare to previous week’s closing figures.
• NYCF showed downward and weaker trend in this week, so closed on negative side by the end of the week.

At last day of the week, JULY 2019 closed at 75.68 with decline of 127 points.

At last day of the week, OCT 2019 closed at 74.27 with drop of 129 points.

At last day of the week, DEC 2019 closed at 74.45 with decrease of 117 points.

Liverpool Index:

A was opened at 87.70 with lower 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 86.20 with decrease of 150 points as of opening figure of the week.

Crude Oil:

Crude Oil prices opened at USD 63.50 with slightly 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 61.94 with decreased of USD 1.56 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 1.12 and British Pound also closed on positive note with figure 1.32 against USD.

Local Yarn:

• Local yarn market remained slow in terms of sale as compared to last week and prices dipped down against customer bids. Most of the mills were interested in current rate, keeping in mind rates touched maximum level. Suppliers are sold for four weeks and managing deliveries as per customer needs. On the other hand, weaving orders became slow and limited enquires floated in market.
• PSF price remained stable during this week ended in domestic market. PTA, MEG and Crude oil prices gradually decreased from last week. Import price for fiber also decreased 2cents by end of this week and it is expected that local fiber price will remains downward and stable for upcoming week.
• Faisalabad trading market reported average business activity. Prices remained stables to make fresh sale in staple and PC/CVC yarn, fine count activity reported slow during this week with limited sale.

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

Export Yarn:

• Chinese customer showed good business activity during last week. Customers have floated handsome numbers of enquiries against which order materialization was good.
• Far eastern customers were active by the Middle of the week and inquired for general update about prices without any firm requirements. European customers floated limited numbers of inquiries and nominal business has been finalized. Customers are back from Easter holidays and started to float enquiries to check the prices and market sentiment. Hence, we might see orders placements in next week. Turkish Market is also inactive with less demand. There was limited demand of double yarns from Bangladesh market.

Local Fabric:

• Local fabric market remained lackluster throughout the week for both narrow and wider width fabrics. Resultantly slow activity reported and prices showed slight dip approx. 1% towards the end of the week.
• Weavers booked limited orders after tough negotiations against limited number of inquiries received. Currently major weavers are booked till mid-June~3^rd week June’19 and offering onward deliveries in narrow width. Whereas wider looms are booked till end June/early July’19 and onward deliveries are available with all weavers.

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:

• It has almost been 3~4 weeks that Fareastern market has remained slow. Customers are buying small quantities for urgent needs from Korea, China and Japan. Other markets like Thailand, Indonesia, Malaysia and Bangladesh were slow to none.
• Asking prices remained stable however 1~2% price negotiation / softness was observed during order discussion. Good suppliers are booked till mid of June and offering end June onward deliveries whereas average suppliers are booked till end of May and offering early ~ mid-June onward deliveries. It is forecasted that prices will remain stable however business activity will remain slow for next couple of weeks.

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

20×16/128×60=63”, in range of 1.20 to 1.22 per yd, 16×12/108×56=63” between USD 1.30 to 1.32 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 and USA markets were active towards the end of the week. Customers are asking limited quantities at the moment due to slow demand especially in narrow width fabric however wider width suppliers are in comfortable zone. Customers from EU and USA are actively buying wider width fabric because of which suppliers are offering end July onward deliveries. Suppliers are hopeful that they will get good support in wider width, but for the narrow width, market may remain slow for next 1~2 weeks.

Home Textiles:

• Customer floated limited inquiries in the market & maturity of business was slow as compared to the last week. USA and Europe have been overserved as being limited with placing their inquiries and orders.
• Prices were firm during last week. Yarn prices started decreasing and due to which improvement was overserved among home textile suppliers who are now offering good prices. Suppliers have orders up to May, 2019 and are under pressure to take on new orders to keep their operations running smoothly. 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 garment industry has emerged as one of the important industries in Pakistan. Its products have large demand both at home and abroad. These orders have somewhat risen in terms of value, but have been fluctuated widely in terms of quantity.
• The apparel segment is the highest value-added link in the entire textile value chain. The global trade in the sector accounts for 53% of the total value of global textiles trade and is consistently growing since the last two decades. USA and the European Union remain as the largest markets for garments and other apparel products with a combined share of 73% in total global clothing trade.
• With the increased demand in recent time, Pakistan’s apparel manufacturers have been catering sufficiently to the buyer’s requirements both in terms of price and deliveries. Current lead time is being asked from 70 to 120 days depending upon the type of the garment.
• Pakistani garment industry is able to offer large volume of its products for export. The industry turns out various kinds of garments for men, women, boys such as plain/embroidered/printed dresses, blouses, maxies, shirts, skirts, night dresses, track suits, middies, trousers, sub-dresses etc.

Going Forward:

• In Local Yarn Market it is expected that market will be remain stable during this 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 levels.
• Export Yarn China and other markets remained active as suppliers are expecting upward trend in days to come. Hence, they showed stable prices with upward trends.
• Local fabric market showing resistance at current level therefore firm sentiments may prevail in coming weeks.
• In Export Fabric, Fareastern markets are not actively buying bulk orders since last couple of weeks and smaller booking are taking place. Prices were stable and were slightly re-negotiated and softened by suppliers when the final orders were under discussion. European and USA markets were active towards end of the week. Bulk orders are under discussion which hopefully will finalize during next week.
• In Home Textiles, overall market has remained slow and in coming days orders will pickup as yarns prices have started reversing.
• A very flourishing and healthy wave to come for apparel industry of Pakistan as it has catered well to the buyers’ requirement in the recent past.