Market Report – Pakistan 3rd June 2019

Local Cotton Highlights:

• Last week, needy buyers showed interest in buying of quality cotton due to the upcoming holidays of Eid ul Fitar. Most of them were trying to cover their short run needs. The industrialists were upset on the news of taking back the incentives and on the news of imposition of sales tax. An uncertainty prevailed in the local market due to the apprehensions of further devaluation of PAK Rupee.
• The ginners were firm with 3 lakh bales offered at the same prices and expecting good margins in coming days due to the late arrival of new crop.
• The Karachi Cotton Association (KCA) spot rate closed at Rs 8800 per maund with increase of Rs.100 during the week. The prices of cotton showed firmness in international market, NYCF and china market showed mix trend whereas Indian cotton showed firmness and slight upward trend.
• The situation of new cotton crop is satisfactory in Sindh while it is not satisfactory in Punjab.
• The government has also announced to take back the energy package from textile sector. Moreover, the government is imposing 17 percent sales tax on industries due to which industrialists were disturbed and they were requesting government through advertisements in the newspapers that due to the increase in the prices of energy, increase in the interest rate and increase in the prices of dollar the cost of production has increased and it has affected the exports badly. The news of further increase in the prices of petroleum products and energy prices has hit the business. The imposition of new taxes will affect the exports in the short run but expected to ease out in the longer run where exporters will benefit from the devalued currency.
• 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 64~74 Lbs. (7,700~9,000/ maund).

New York Cotton Futures:

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

At last day of the week, JULY 2019 closed at 68.08 with decrease of 31 points.

At last day of the week, OCT 2019 closed at 67.77 with decline of 22 points.

At last day of the week, DEC 2019 closed at 67.07 with downward of 48 points.

Liverpool Index:

A was opened at 77.75 with same 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 80.10 with increase of 235 points as of opening figure of the week.

Crude Oil:

Crude Oil prices opened at USD 58.63 with same 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 53.50 with decreased of USD 5.13 cents as of opening figure of week.

Pakistan Currency Exchange Rates

• In last week values of Pak rupee apricated 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 1.26 against USD.

Local Yarn:

• Local yarn market remained downward during the last week ended, with very limited sales. Prices were dropped by Rs.4~5/lbs due to less demand from end customers. Coarser counts came under more pressure to massive production and some turbulence from Siro export yarn toward China. Weavers were waiting for some more correction and due to less sale of fabric buyers resisted further yarn procurements.
• PSF price dropped by Rs.5/kg in domestic market dated 27^th May 2019. Imported polyester fiber dropped in international market which cause a further drop in local fiber prices. PTA, MEG price remained stable during last week, crude oil graph in International market also remained soft for the week.
• Faisalabad trading market reported slow business activity from start of the week and ended with an absence in buying. Prices remained under sale pressure and dropped in calling as mills were interested on cash sale before Eid payment and lifting.

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 dullness as business activity remained silent. After trade war between US-China, Chinese currency is continuously depreciating which is discouraging importers. 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 firmness last week against USD. However, prices may show slight correction in days to come as demand from export countries is quite slow.
• HK customers remained on the side line and no such enquiries were received. European customers floated limited numbers of enquires against which numberless orders were closed. Major reason is indecisiveness from customers due to uncertain market conditions. We might see some business activity in next week if customers get attractive prices. Bangladesh customers were silent as well and no such business was materialized.

Local Fabric:

• Fear of slow business activity started gripping the local fabric market for both narrow and wider width fabrics. Weavers received limited inquiries from their buyers and limited business materialization reported in the market due to low bids from buyers. Weavers reduced their asking by 1~1.5% due to soft yarn prices.
• Major weavers are offering early ~ Mid July onward deliveries for narrow width and end July onward for wider width looms. However special looms deliveries are available for August/September.

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 selective buying was noticed during last week from Far Eastern customers. There are no aggressive inquiries in the market as customers are looking for further drop in the prices due to a drop in cotton prices in the international market.
• Chinese customers were silent from last couple of weeks. Korean customers were on selective their procurements. Limited buying was observed from Bangladesh and Japan. Other markets like Indonesia, Vietnam, Thailand were almost quiet.
• Asking prices were soften by 2% due to softness in raw material prices. 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 ~ mid July deliveries. It is expected that market will remain slow and quiet during the next week due to Eid holidays.

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.

• Only wider width fabric customers are responding well whereas narrow width buyers were almost quiet where they exchanged few inquiries for price checking from European sectors. USA buyers were slow during the week under review.
• Wider width suppliers are booked till mid of Aug and offering end Aug ~ early Sep onward deliveries. Prices for wider width also softened by 2~3% due to lower prices of yarns in fine count items. The activity for next week will remain dull to holidays in Pakistan.

Home Textiles:

• Home Textile business activity slightly improved last week. USA Market and their order placements were substantially improved. European business was also on the move. Customers placed order for their current and new requirements.
• Prices were slightly increased in the last week due change in yarn prices. And because of the upcoming Eid holidays in Pakistan, buyer showed interest to buy yarn for their upcoming orders. So due to increase in yarn demand spinners increased the Yarn prices which effected the finished product prices with almost 2 to 3% rise in prices in the last week.
• Suppliers were still offering very good prices just to capture bulk orders. As far as shipments are concerned suppliers are offering 65 to 70 days for new orders & for repeat orders supplier are offering 50 to 60 days.

Garments:

• Competition is on rise in the global apparel and textile markets and things are going to heat up even more. Countries like Vietnam, Cambodia and Sri Lanka have become the new disruptors and are vying to get a bigger share of the global textile pie. The Long-Term Plan under CPEC includes improving industrial co-operation in textiles by developing efficiencies in the textile and apparel value chain and expanding the size of the industry.
• According to the recently released report by the Pakistan Business Council on the garments sector, the impact of CPEC is likely to include improved energy supply for the industry, better internal connectivity and logistics as well as new international market linkages as a result.
• Garment factories in Pakistan are working at their full capacities to meet the targeted deliveries of the orders in hand. Prices are viable at the moment for new orders and deliveries being asked from end August onward.

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 get adjusted. Further price trends of yarn will be according to demand and supply of different counts which will lead the price levels.
• In Export Yarn it is expected that business activity will start in the mid-June as things might get clear for both customers and suppliers.

• In Local Fabric market growing uncertainty and slow market sentiments may continue to haunt the spinners and weavers for coming weeks.

• In Export Fabric, Fareastern markets were doing selective buying mainly from South Korea. European and USA markets were slow for bottom weight fabric however wider width business in Europe is still good.
• Overall the Home Textile market good order placements during last week and after the Eid holidays further improvements and order placements are expected.
• In Garment industry, with the technology and skill transfer from China through CPEC it is expected that apparel industry infrastructure in Pakistan will further gain momentum.