Market Report – Pakistan 27th May 2019

Local Cotton Highlights:

• Last week, only needy buyers showed interest in local cotton market and most of the buyers were remained on sidelines. Several mills were on the sideline just to observe new developments on the economic front led by the hype of the US$ getting stronger in previous days and the US China Trade War. The ginners were firm on same prices as less fine quality lint is left with them. The ginners are left with the stock of 4 lac bales.
• In local cotton market, prices were almost on the same levels with minor fluctuations. The Karachi Cotton Association (KCA) spot rate closed Rs 8700 per maund with increase of Rs.100 in this week. NYCF also fluctuated in this week. The rate of cotton increased in New York Cotton Market after decreasing. However, mixed trend was seen in Chinese cotton market. There were the rumors that government has decided to take back the subsidy from the zero rated five industries which includes textile industry.
• Sowing in Sindh has been completed and full fledge putti arrival from Sindh is expected by mid-June onward, while in Punjab cotton sowing is under way and arrival will be further late. A meeting regarding budget proposals for agriculture development has recommended that the regulatory duty on cotton import may be restored to prevent the massive import and dumping of cotton, and enable the farmers to receive international parity price. It seems that prices will remain firm in local cotton market and activity will remain on a slow pace due to less stocks of fine quality with ginners.
• 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 62~72 Lbs. (7,700~9,000/ maund).

New York Cotton Futures:

• New York Cotton futures opened with higher 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 68.56 with rose of 65 points.

At last day of the week, OCT 2019 closed at 67.99 with increase of 41 points.

At last day of the week, DEC 2019 closed at 67.73 with upsurge of 08 points.

Liverpool Index:

A was opened at 77.35 with increase level from previous week’s closing figure.

• In this week Index “A” showed mix trend in this week and at the end closed on positive side.
• At last day of the week, LPI “A” closed at 77.75 with increase of 40 points as of opening figure of the week.

Crude Oil:

Crude Oil prices opened at USD 63.10 with higher level as compared to last week closing figures.

• In this week, crude oil prices showed downward trend 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 58.63 with decreased of USD 4.47 cents as of opening figure of week.

Pakistan Currency Exchange Rates

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

Local Yarn:

• Local yarn market prices jumped up after Rupee devaluation against US $ in the last week ended. Some of buyers covered yarn for their pending/running orders or for their urgent needs only. Overall market remained slow in term of sale materialization.
• PSF price remained stable during last week ended in domestic market. Import polyester fiber dropped in Import and compensated by devaluation which cause price stability. PTA, MEG and Crude oil prices was stable in international market. Now price of fiber expected to remains same for next week.
• Faisalabad trading market reported Good business activity from start of week and ended with Quiet. Prices remained stables to make fresh sale in staple and PC/CVC yarn, fine count activity reported also good during.

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

Export Yarn:

• Another week in a row for Chinese market showed sluggish business activity due to trade war between USA and China. Chinese RMB is continuously under pressure and it seems it may get further depreciated in days to come. This has put severe pressures on importer and they are scared of placing forward orders in fear of further depreciation. Customers are almost under silent mode and not showing any interest in further buying. On the other side, Pakistan Rupee showed weakness against USD for another week 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 no such enquiries were received. European customers were almost silent due to considerable decline in cotton price in last 2 weeks. Limited enquiries were received and customers have shown interest at lower prices which are under discussion. We might see some business activity in next week if customer got attractive prices. Bangladesh customers were silent as well and no such business was materialized.

Local Fabric:

• The local fabric market remained steady and firm, however uncertainty gripped the market due to Pak currency volatility and buyers forced to take back seat throughout the week.
• Buyers floated limited inquiries and against those limited business reported in the market for both narrow width and wider width fabrics.
• Spinners kept their asking prices firm therefore, resultantly fabric prices showed firm posture. Weavers are offering end June/early july for narrow width and end July onward for wider width looms deliveries.

Local fabric prices of regular items are as follows:

20×16/128×60=63”at USD 1.09 to 1.11 per yard, 16×12/108×56=63” in range of USD 1.18 to 1.20 per yard and 20×20/108×58=63” was sold in range of USD 0.91 to 0.93 per yard based on ex mills.

Export Fabric:

• A bit of an improvement has been seen in the Far Eastern markets as some of the customers have exchanged limited inquiries resultant limited booking with selected suppliers. Fabric prices were soft by 1~2% due to continuous less demand since last couple of weeks.
• Good suppliers are booked till mid of July and offering end July onward deliveries whereas average suppliers are booked till end of June and offering early June onward deliveries. Suppliers are expecting that customers may start buying from next week however the volumes may be small in quantities.

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

20×16/128×60=63”, in range of 1.16 to 1.18 per yd, 16×12/108×56=63” between USD 1.24 to 1.26 per yd and 20×20/108×5863” in range of USD 0.96 to 0.98 per yd based on CNF Far Eastern ports.

• No improvement was seen in European markets as limited inquiries were discussed during the week thus limited buying was noticed. USA market was active however small quantity orders were discussed mainly looking for sharp deliveries.
• Wider width suppliers have good booking hence they are offering Aug onward deliveries.
• It is expected that wider width business will remain good however narrow width business may less in coming days.

Home Textiles:

• Home textile market business activity has performed satisfactory in previous week. Customers floated few inquiries in the market & maturity of business was firm. USA Market was slightly better and customers were floated good inquiries and maturity of orders. European market business improved slightly. New orders were for new designs.
• Prices were slightly decreased during last week due to the devaluation of Pakistani currency to almost 2 to 3% decline. On the other hand, Yarn prices were slightly increased at the same time. Almost all supplier have 60 to 70% orders against their production facilities, so to full fill their production capacities at 100% they are trying to get more orders from different customers / markets, and are offering excellent sharp prices.
• As far as shipments are concerned supplier is offering 65 to 70 days for new orders & for repeat orders supplier are offering 50 to 60 days.

Garments:

• In recent time garment manufacturers have made investments in power generation capacity, upgrading IT, developing design and R&D capability, and opening up offices and warehouses in or near major markets and fashion centers to give full and easy access of the products to customers.
• Garments manufacturing is the least energy- and capital-intensive industrial activity and thus resonates with Pakistan’s resource endowment to generate economic growth and employment. However, to fully realize its potential, apparel manufacturers need to move up the value chain.
• 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. 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 despite the recent devaluation of Pak Rupee against US Dollars. Factories are offering sixty to ninety days lead time according to their available capacities and as per design of the garment.

Going Forward:

• In Local Yarn market it is expected that market position will be clear by 2^nd week of June and prices are expected to adjusted. Further price trends of yarn will be according to demand and supply of different counts which will lead price level.

• Local Fabric Market has technically been slow but firm market sentiments may continue for both widths for coming weeks.

• Export Fabric Fareastern markets were little bit active hence they bought small quantities. European markets remained dull and slow with limited inquiries. USA market was little bit active however they were mainly checking prompt shipments.

• Home Textiles market was slightly better and witnessed good activity in the market, keeping in view current market scenario it seems that business will be further improve in coming days.

• Given the emerging opportunities and the support of the government, growth in the export of garments is likely to accelerate. However, a significant bump up in the growth trajectory will only take place if import policies and customs procedures are substantially reformed.