Market Report – Pakistan 24th June 2019

Local Cotton Highlights:

• Last week, slow trade movement was seen as needy buyers were making deals to cover their short run needs. Many participants were confused over the situation, created by the budget announcements. It’s a wait-and-see situation in the market these day because of lack of direction.
• From Sindh, 20 ginning factories had started their operations. Due to the increasing heat wave the demand of Phutti is increasing. Also, there is a news of partial arrival of Phutti from Punjab and rainful is being experienced which is good for the cotton growing areas and the crop itself. The ginners had stock of approximately 2 lac 50 thousand cotton bales. The ginners are opposing the imposition of 10 percent sales tax on cotton announced by government in budget.
• The prices of cotton showed softness due to the absence of the buyers and improving phutti of new crop. The Karachi Cotton Association (KCA) spot rate dropped Rs. 100 and touched the level of 8700 per maund with same level without any changes. It is expected that 80 lac bales will be produced in Punjab while the production of cotton in Sindh is expected to be 45 lac bales. It is estimated that one lac bales will be produced from Balochistan and Khyber Pakhtunkhwa. The total expected production of cotton will be 1 crore 26 lac bales. Moreover, sowing of cotton has completed. Many ginning factories in Sindh have started ginning.
• Mixed trend was seen in the international market but bearish trend was seen in the rates of New York Cotton Market. The fluctuation in Dollar rate, news regarding crop and trade conflict between China and America and rising tension between America and Iran including decrease in exports as compared to last month were the reasons of bearish trend. Fluctuation was seen in the prices of cotton in India while mixed trend was seen in China. It is expected that market will retackle on China and USA trade conflict between the expected meeting of Chinese and American Presidents in the coming G-20 meeting.
• Prices of seed cotton (Kapas/Phutti) for the new crop (2019-2020) in Sindh were in range from Rs 3900 to Rs 4000 per 40 Kgs and new crop phutti is available from Sindh in range from Rs 8800 to Rs 9000 per maund (37.32 Kgs). Prices of lint for the crop (2018/2019) from Sindh & Punjab is available in range from Rs 7700 to Rs 9000 per maund (37.32 Kgs). Overall deals were made between the range of USC 60~70 Lbs. (7,700~9,000/ maund).

New York Cotton Futures:

• New York Cotton futures opened slightly higher level on Monday as compare to previous week’s closing figures.
• NYCF showed downward 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 61.19 with decrease of 444 points.

At last day of the week, OCT 2019 closed at 64.73 with down of 233 points.

At last day of the week, DEC 2019 closed at 65.56 with dropped of 86 points.

Liverpool Index:

A was opened at 77.80 with higher level from previous week’s closing figure.

• In this week Index “A” dropped in next two sessions, while increased in next week sessions and at the end closed on positive side.
• At last day of the week, LPI “A” closed at 77.90 with increase of 10 points as of opening figure of the week.

Crude Oil:

Crude Oil prices opened at USD 51.93 with low 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 57.43 with increased of USD 5.50 cents as of opening figure of week.

Pakistan Currency Exchange Rates

• In last week values of Pak rupee showed downward tendency 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 1.14 and British Pound also closed on positive note with figure 1.28 against USD.

Local Yarn:

• Local yarn market prices remained under sale pressure from start of this week and sales are being made only for deliveries before 30^th All weavers/traders were in hurry to lift yarn before GST and most people have built their inventories at their end. Overall market prices remained stable with limited sale during this week. Most of mills were interested to sell July delivery but buyers remained away from bidding forward delivery.
• PSF price remained stable during this week ended in domestic market. Import polyester fiber price increased for Imported fiber. PTA, MEG and Crude oil prices was stable in international market. Now price of fiber expected to increase or remains same for next week.
• Faisalabad trading market reported slow business activity. Most of trader was covered till 30^th June and was busy in lifting and to build stock to avoid 17% GST imposed in Federal Govt. Budget. Prices jumped up only before 30^th June sales.

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

Export Yarn:

• Market showed slight improved in activity in terms of enquiries as customers have been in the market and are checking prices constantly. Major reason was correction in prices which attracted buyers to place orders.
• It has been noticed that suppliers have shown flexibility in prices to grab orders as they are carrying stocks specially in coarser counts.
• US – China trade war is still unresolved and it is expected that things will not get settled in near future as both are trying to show strength and not ready to be flexible. Suppliers are under pressure due to non-opening of LCs. On top of that, due to financial year closing in June, suppliers have to dispatch the stocks which have put them under difficult situation and they are trying to sell even at lower levels.
• European customers remained under sluggish business activity. Good level of enquiries remain under discussions till mid-week. However, mid-week onwards, most parts in Europe were on holidays due to which activity remained dull and slow. However, we might see some order placements in next week only where suppliers will match customers desired price level.
• HK customers remained on side line and no such enquiries were received. Bangladesh customers were silent as well and no such business was materialized.

Local Fabric:

• The local fabric market is giving away its gained momentum and getting slowed down with each passing day for both narrow and wider width fabrics.
• Week closed with slower activity however prices increased by approx 3% mainly due to currency fluctuation. Weavers booked limited orders after tough negotiations and offering 3^rd week July ~ end July onward deliveries for narrow width and end July ~ early August’2019 onward for wider width looms. However special looms deliveries are available for End 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 0.92 to 0.94 per yard based on ex mills.

Export Fabric:

• Limited number of inquiries were received from Fare Eastern markets due to slow demand from end users / customers. Korean customers have sent few inquiries resultant limited booking. Chinese customers were aside of buying without any considerable inquiries. Bangladesh and Sri Lankan customers have bought good quantities against last week inquiries. Vietnam, Thailand and Indonesia customers were aside of buying.
• Prices were stable and even the yarn prices were firm. Good suppliers are booked till end of July however average suppliers are booked till mid of July and offering onward deliveries. It is expected that business activity may remain slow in coming days as well.

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

20×16/128×60=63”, in range of 1.12 to 1.14 per yd, 16×12/108×56=63” between USD 1.21 to 1.23 per yd and 20×20/108×5863” in range of USD 0.93 to 0.95 per yd based on CNF Far Eastern ports.

• Some of the European sectors were very active during the week under review. Suppliers got good inquiries thus booked decent quantities with Portuguese customers. Italy, Germany markets were also active but no considerable booking was noticed. Good number of inquiries were received for wider width fabric and suppliers took advantage to book good quantities and extended their further sales coverage.
• USA market was active thus exchanged bulk inquiries in T180 ~ T300 which hopefully will finalize during next week. Wider width suppliers have booking till end of Aug and offering Sep onward deliveries. Some of the weavers are offering mid Aug deliveries as well. It is expected that wider width business activity may remain good in coming days and prices will remain stable.

Bed Linen & Towels:

• Bed Linen business activity has performed well in the last week. Customers floated goods inquiries in the market & maturity of business has remained good as compared to the last 2 or 3 weeks.
• USA and European markets Customers have been sending good inquiries and placing orders for upcoming Q4 holiday season. Prices were firm in the last week. Yarn prices are further decreasing yet firm, which directly affected the cost of finished products and product prices have been further decreasing. keeping in view current market situation it seems that the prices will be remain at current level in the upcoming weeks.
• 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:

• The Garment industry has seen a 20% growth in last 7 months in terms of volumes, these are big numbers we are talking about here. And this has led to further government support towards expansion of machinery and technology to increase Value Added exports.
• All major factories are booked for over a year with annual contracts.

Going Forward:

• In local yarn market it is expected that the market will come under sale pressure in early July due to slow buying mood from buyers and slow fabric sale activity. China Siro yarn sale-based mills are also under local sale pressure and excessive yarn supply will remains in domestic market. 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 business activity will be remain nominal with limited orders placements where customers will get their desired price levels.
• In Local Fabric Market increased uncertainty is expected due to currency devaluation and limited flow of inquiries as many mills are now geared towards exports taking advantage of the devaluation.
• In Export Fabric Market Fareastern markets improved a little thus suppliers booked decent quantities. European markets have exchanged good number of inquiries resultant good booking both in narrow & wider width. USA market was active with bulk inquiries which hopefully will finalize during next week.
• In Bed Linen & Towels market business has improved, keeping in view current market scenario it looks business will be further improve in upcoming weeks.
• In Garments sector new development and unit expansion are expected to cater to the rising demand due to exports becoming lucrative.