Market Report – Pakistan 13th May 2019

Local Cotton Highlights:

• Last week, conscious buying activity was seen in the local cotton market. Most of the buyers and spinners didn’t show interest in buying. Due to the downward international trend in terms of prices. Also, there could be a reason as leading buyers were focusing on USA imported cotton.
• The ginners were still firm despite of the internationally downward trend. The ginners had left the stock of 4 lac bales out of which good quality cotton is available in very small amount.
• In local cotton market, prices were almost on same levels and didn’t observe the downward trend. The Karachi Cotton Association (KCA) spot rate closed Rs 8800 per maund on same previous level with minor fluctuation.
• International cotton market showed drastic dropped in prices because of rising trade war between America and China. The rate of New York Cotton came down at the level of 68 American Cent per pound which is the lowest in the season. The prices of cotton in China remained under pressure while the recession in Indian cotton market remained continued.
• it is expected that cotton production in India may decrease by 6 lac bales. It is expected that after the reduction of 6 lac bales the expected production of cotton will be 3 crore 15 lac bales. Therefore, price of cotton in India is expected to increase from Rs 48000 per candy (356 Kg). Although after that the price of per candy cotton increased and reached at Rs 47000 but due to the China and America trade conflict the prices of cotton decreased and reached at the lower level of Rs 45000.
• The sowing season has started in the areas of Punjab and Sindh but up till now and several meetings were held regarding fixing the price of cotton seed but up till no announcement has been made by the government regarding cotton policy. The sowing season will be completed till May 31. It is necessary that cotton policy should be announced before the completion of the sowing season any delay will affect the sowing of cotton.  Punjab government has projected cotton sowing area 6 million acre. It is expected that the country to achieve higher-than-expected cotton production during the current year.
• 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 67~78 Lbs. (7,700~9,100/ maund).

New York Cotton Futures:

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

At last day of the week, JULY 2019 closed at 68.45 with decline of 510 points.

At last day of the week, OCT 2019 closed at 69.65 with drop of 301 points.

At last day of the week, DEC 2019 closed at 69.40 with decrease of 351 points.

Liverpool Index:

A was opened at 84.95 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 81.90 with decrease of 305 points as of opening figure of the week.

Crude Oil:

Crude Oil prices opened at USD 62.25 with lower level as compared to last week closing figures.

• In this week, Next day price dropped and then recovered in next session, while showed downward till closing, hence, closed on negative side at the end of week.
• In last day of the week, Crude Oil price closed at USD 61.66 with decreased of USD 0.59 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 negative note with figure 1.30 against USD.

Local Yarn:

• Local yarn market remained slow in term of sale as compare to last weeks and prices dipped down more against customers bids. Most of mills were interested in current rates sale, keeping in mind rates touched maximum level. Suppliers are sold for four weeks and managing deliveries as per customer need. On the other hand, weaving orders became slow and limited enquires floated in market.
• PSF price dropped by Rs.3/kg in domestic market dated 6^th May 13, 2019. Import fiber polyester dropped in international market which cause to drop local fiber prices. PTA, MEG price remains stable during this week, crude oil graph in International market also remained stable for this 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 sluggish business activity during this week. Customers have floated limited numbers of enquiries against which order materialization was also dull. Overall market remained under silent mode as customers are expecting drop in prices due to slash in cotton prices internationally. Hence, they showed wait and see mode. Far eastern customers came by Middle of week and asked for general update about prices without any firm requirements. European customers floated limited numbers of inquiries and nominal business has been finalized. Turkish Market is also inactive with less demand. There  was limited demand of double yarns from Bangladesh market.

Local Fabric:

• In current week under review the local fabric market has not moved much. Fabric market remained slow and bearish sentiments gripped the market with hint of slight soft trend reported towards the end of the week for both narrow and wider width looms.
• Weavers received limited inquiries and flow of inquiries dropped considerably from buyers, consequently negligible business reported in the market.
• Currently major weavers are booked till 3^rd week June ~ End June for narrow width and end June-early July’19 for wider width looms and offering onward deliveries.

Local fabric prices of regular items are as follows:

20×16/128×60=63”at USD 1.16 to 1.18 per yard, 16×12/108×56=63” in range of USD 1.25 to 1.27 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:

• Another week went slow for Far eastern markets as supplier received just limited number of inquiries resultant no any considerable business during the week. Most of the customers are expecting that fabric prices will go down further due to softness in raw material prices but suppliers are not ready to reduce their prices due to multiple factors including currency depreciation rumor, raw material prices are not too much flexible, delay in new crop, shortage of current crop size etc.
• Asking prices were 1~2% soft depending on the order quantity however customers were looking for more reduction in prices thus suppliers could not get even small quantity of orders. Good suppliers are booked till end of June and offering early July onward deliveries whereas average suppliers are booked till mid of June and offering onward deliveries. Suppliers are expecting slow business in coming days and prices may remain stable with little bit soft tone.

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 remained active during the week. European customers have sent good quantity of inquiries and booked decent quantities as per market prices. USA customers were discussing bulk quantity of orders in basic items and booked bulk orders mainly in CVC. Wider width suppliers have good orders in hand thus they are offering Aug onward deliveries. Few suppliers have some space to offer end July deliveries in wider width just to accommodate their regular customers. Wider width suppliers are keeping their prices stable due to stable raw material prices in medium to fine count yarns. It is forecasted that wider width fabric business will remain good in coming weeks.

Home Textiles:

• Home textile market business activity remained firm in last week.  Customer floated limited inquiries in the market & maturity of business was better as compared to the last week. USA Market activity was still slow in last week but good inquiries were floated in the market. Customers placed few orders. European markets were also slow & customer placed limited orders which were for future collection.
• Prices were firm in last week. Yarn prices are going to decrease since last week. Due to yarn prices improvement suppliers are offering good prices. keeping in view yarn market situation it looks that market will be further improved in upcoming weeks and finished product prices has been decreased slightly. Suppliers have orders up to mid-June, 2019 but suppliers are still under sales pressure to fulfill their capacities 100%, so they are trying to get more orders from different customers / markets, even to full fill their capacities suppliers are offering very sharp prices to capture bulk orders. As far as shipments are concerned supplier is offering 65 to 70 days for new orders & for repeat orders supplier are offering 50 to 65 days.

Garments:

• Pakistani garment factories have found out the dynamics of competitive advantages and utilizing them effectively to get the best business volumes in the global markets. There are good communication and transportation infrastructure to facilitate the garment industry of Pakistan. For communication, modern and up-to-date technology is available to contact the customers in different regions of the world and cheap communication reduces the production cost.
• So far the Pakistani garment industry is performing well in all the concerned areas; however, at the same time there are some areas to develop the garment industry at local and in global markets. Pakistan has enormous labour force resources availability; on the other hand, there are some unskilled and semi-skilled labours. But still the labour cost is inexpensive than other countries, so these factors are supportive to become competitive in the foreign markets.
• Apparel manufacturers are keen to develop and explore the garments business by using various strategies according to the competition situations in domestic and global markets. Prices are viable at the moment with sixty to ninety days lead time.

Going Forward:

• In Local Yarn Market it is expected that market will be remained slow for next week. US$ against Pak rupee devaluation, Federal Govt. budget may impact on market in upcoming days. Further price trends of yarn will be according to demand and supply of different counts which will lead price level.
• In Export Yarn Market it is expected that this week, we might see order materialization as customers are discussing idea prices.
• Local fabric market will be range bound for coming weeks however weavers may show eagerness to negotiate their initial offers owing to prevailing slow market sentiments.
• In Export Fabric Market, Fareastern customers could not place orders due to wide gap between offering and target prices. USA and European markets were active hence they have booked decent quantities mainly in wider width. It is expected that wider width market will remain good and narrow width suppliers may have some sort of sales pressure if market did not respond well.
• In Home Textiles, overall market was firm and in coming days it looks situation will be further improve, as per forecast market will be firm because yarn prices are firm. So it looks that customers start the buying and Customer will place good orders in upcoming weeks because suppliers are offering good prices.
• Pakistani Garments industry has the capability to offer an extensive range of garments with massive volume for exports to different world markets.