Market Report – Pakistan 20th May 2019

Local Cotton Highlights:

• Last week, needy buyers were interested in buying of local cotton amid rising trend of US$ and deprecation of Pak rupees. Business community is living under the umbrella of persisted uncertainties. The ginners were still firm despite of the internationally downward trend. The ginners are left with the stocks 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 8650 per maund with drop of Rs.50 in this week.
• International cotton market during last week remained on a soft pace.
• Sowing of new season is underway. Government has advised growers to complete cotton sowing by May 31. There are chances of less pink bollworm attack on cotton crop this year due to better off-season management. (PCGA) has shown interest in providing Rs 200 per maund extra premium to growers over clean cotton picking due to increasing demand of cotton. Rs 800 on potash and Rs 500 subsidy on DAP per bag was being offered for proper use of fertilizers and to reduce cost of production on cotton crop.
• 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 64~75 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 mix trend in this week and closed on positive side by the end of the week.

At last day of the week, JULY 2019 closed at 65.99 with decline of 54 points.

At last day of the week, OCT 2019 closed at 66.39 with drop of 26 points.

At last day of the week, DEC 2019 closed at 66.38 with decrease of 02 points.

Liverpool Index:

A was opened at 80.70 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 76.85 with decrease of 385 points as of opening figure of the week.

Crude Oil:

Crude Oil prices opened at USD 61.04 with lower level as compared to last week closing figures.

• In this week, crude oil prices increased in whole week and dropped on closing, hence, closed on positive side at the end of week.
• In last day of the week, Crude Oil price closed at USD 62.76 with increased of USD 1.72 cents as of opening figure of week.

Pakistan Currency Exchange Rates

• In last week values of Pak rupee dropped drastically 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 1.27 against USD.

Local Yarn:

• Local yarn market was quite in the beginning of the previous week, but activity started in anticipation of Pak rupee devaluation against US$. After devaluation prices were held by the mills to understand logical level where it settles and then mills will start with their price offerings.
• PSF price remained stable during this week ended in domestic market. PTA, MEG and Crude oil prices were stable in international market, but China import fiber price dropped by the end of last week. Due to Pak rupee devaluation, price of fiber is expected to remain same for the next week.
• Faisalabad trading market reported average business activity. Prices remained stable in order to push for fresh sales of 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 market remained almost silent due to the trade war between USA and China. After US sanctioned china for USD 200 Billion, this has put massive impact on Chinese economy. Chinese RMB is continuously on decline and it seems it may get further depreciated in days to come. Customers are almost under silent mode and not showing any interest in further buying. In fact, LCs of all pending orders which were confirmed previously have slowed down and some of them might not open.
• On the other side, Pakistan Rupee showed drastic depreciation and this is attracting suppliers to place orders in exports. Hence, we might see slight drop in prices in days to come.
• HK customers remained on side line and floated minimal enquiries just for price checking. European customers were almost silent due to considerable decline in cotton price in last 2 weeks. Limited enquiries were under discussions but no such bids were received from customers side. We might see some business activity in next week if customer gets attractive prices. Bangladesh customers were silent as well and no such business was materialized.

Local Fabric:

• The rupee comes in the line of fire which kept the market standstill till the end of the week. Last Week started with limited activity for both narrow and wider widths with hint of softness in the start of the week but after mid of week, rupee devaluation created uncertainty and havoc in the market.
• Major weavers are booked till 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:

• It’s been few weeks that Far Eastern markets are not picking up momentum. Customers from Korea, China and Bangladesh are sharing limited inquiries resultant limited business as small quantities. Other markets like Vietnam, Thailand, Sri Lanka and Japan markets remained slow.
• Suppliers held their prices towards end of the week after sudden currency devaluation against US Dollar however it did not impact the export prices. Yarn prices have slightly gone up but the currency compensated the prices because of which the asking prices were same without change.
• Currently good suppliers are booked till end of June and offering early ~ mid July onward deliveries whereas average suppliers are booked till mid of June and offering end June deliveries. Some of the suppliers are in sales pressure due to less business activity during last couple of weeks hence they are eager to discuss any reasonable target price to get orders. It is expected that business activity may remain selective due to less demand from end customers and prices will remain stable with firm tendency in next week.

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.

Home Textiles:

• Home Textile market was firm during last week. USA Market activity was slightly better and customers floated good inquiries along with placement of orders. European markets were also placing orders but in limited quantities.
• Prices were firm in the last week, but suddenly Pakistani currency start to devalue and almost 7% has been devaluated by the end of the week. Impact of currency devaluation on prices will be seen during this week. Prices are expected to slightly decrease due to currency devaluation.
• Suppliers have orders up to June, 2019 but suppliers are still under sales pressure to fulfill their capacities at 100%. Many suppliers have 60% to 70% orders against their production capacities. As far as shipments are concerned supplier are offering 65 to 70 days for new orders & for repeat orders supplier are offering 50 to 60 days.

Garments:

• The fashion and apparel industry in Pakistan are experiencing accelerated growth. In recent years, the apparel sector has witnessed entry of some of the biggest textile groups of the country with their own brand names. Plus, the talented designs are projecting the cultural heritage of Pakistan.
• Fashion products and apparel industry is showing dynamism and diversity in Pakistan. Most of the sales of branded clothing taking place through franchises that have bought the right to sell these products to consumers.
• Pakistan being manufacturing facility to many world-renowned brands and moving consistently towards digitalization through e-commerce, e-business and virtual business, which enables a direct link to global market which operates in the age of digital presence.
• With the current orders in hand for Fall Winter 2019 range factories are focusing to deliver the quality products to meet the targeted shipment dates. For the new inquiries lead time is being asked from sixty to eighty days for basic articles and for fashioned articles it is from eighty to hundred days depending upon the type of embellishment. Current devaluation of Pak Rupee with US Dollars might put its impact on pricing in coming time.

Going Forward:

• In Local Yarn Market it is expected that market will take a jump in calling and price will be adjusted in two weeks ahead. Further price trends of yarn will be according to demand and supply of different counts which will lead price level.
• In Local Fabric Market uncertainty may continue to grip for coming weeks however prevailing slow market sentiments may also put pressures on weavers.
• In Export Fabric Market the Fareastern side couldn’t pick up momentum hence selective buying was observed. European and USA customers were also slow during the week and expected to remain slow during coming days due to less demand.
• Home Textiles Market was firm and did not witness any rapid activity in the market, but the situation will improve due to currency devaluation and exports becoming lucrative then before.
• Overall Pakistan’s Garment industry is flourishing with a bright future as factories are working on their full capacities.