Market Report – Pakistan 8th July 2019

Local Cotton Highlights:

• Last week, in the local market during the last week buying interest and volume was increased comparatively last week. There is an increase in the supply of Phutti and increase in demand of cotton. Although, mills and spinners become choosy as quality cotton is not available easily. On the other hand, economy situation is also in tough face as many businessmen and traders protesting, urging government to immediate withdraw sales tax on zero-rated sectors.
• The price of local cotton increased in this week around 200~300/maund due to increase trend by local buyers and due to the international trend, was on positive side. The Karachi Cotton Association (KCA) spot rate(2019-2020) increased Rs.200 and touched the level of 8200 per maund. Ginning factories are becoming operational due to the increase in arrival of phutti but not reducing the price despite of that the decrease in the price of Dollar as compared to Rupee.  The ginners had the stock of one lac fifteen thousand old cotton bales which are available at the rate of Rs 7000 to Rs 8600 per maund according to the quality.
• Production of cotton crop is satisfactory in Sindh and cotton on allocated land in Punjab is completed. It is expected that production of 80 lac bales of cotton will be achieved in Punjab. According to the information Tadi Dal has reached from Sindh to some areas of Punjab. There is a chance of loss of standing cotton crop due to the attack of Tadi Dal. According to the information Army Worm has attacked the cotton crop in China. In India cotton sowing was completed on 14.7 million hectares which was 10 million less as compared to last year due to the late starting of Monsoon season. The bearish trend was seen in Indian cotton market despite the low cotton production.
• The local business in the country is affected due to the imposition of 17 percent GST on zero rated industries particularly imposition of 17 percent GST on textile products and 10 percent GST on cotton has decreased the business of factories especially textile processing sector is on strike for the last six days due to which crisis like situation has evolved and the traders and industrialists are protesting against the imposition of GST. People are uncertain due to imposition of sales tax in new budget and increase in the prices of energy. Many people are worried due to strikes. The government has extended the date of duty-free import of cotton till July 31.
• Prices of seed cotton (Kapas/Phutti) for the new crop (2019-2020) in Sindh were in range from Rs 3500 to Rs 3900 per 40 Kgs and new crop phutti is available from Sindh in range from Rs 7800 to Rs 8400 per maund (37.32 Kgs).
• In Punjab prices of seed cotton was in range from Rs 3600 to Rs 4000 per 40 Kgs and new crop phutti is available from Punjab in range from Rs 7800 to Rs 8500 per maund (37.32 Kgs).
• Overall deals were made between the range of USC 61~66 Lbs. (7,800~8,500/ maund).

New York Cotton Futures:

• New York Cotton futures opened on higher level on Monday as compare to previous week’s closing figures.
• NYCF showed upward trend in two sessions and later showed downward trend hence closed on positive side by the end of the week.

At last day of the week, OCT 2019 closed at 66.24 with increase of 27 points.

At last day of the week, DEC 2019 closed at 66.82 with rose of 24 points.

At last day of the week, MAR 2020 closed at 67.82 with upsurge of 40 points.

Liverpool Index:

A was opened at 77.00 with lower level from previous week’s closing figure.

• In this week Index “A” showed upward trend and at the end closed on positive side.
• At last day of the week, LPI “A” closed at 78.35 with increase of 135 points as of opening figure of the week.

Crude Oil:

Crude Oil prices opened at USD 59.09 with higher level as compared to last week closing figures.

• In this week, crude oil prices showed mix 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 57.51 with decrease of USD 1.58 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 1.25 against USD.

Local Yarn:

• Local yarn market remained Quit with dull business activity. Every one seller and buyer were confused on Sale Tax issues. SRO and implementation of sale tax on all segment was yet to much clear before making business. Most of mills were interest in sale but buyers remained away from buying.
• PSF price jumped up Rs.5/kg dated 2^nd July 2019 by IFL in domestic market. PTA prices were sharply increased, Crude oil and MEG prices were firmed in international market. Import fiber prices increased in International market was a reason to increase local polyester fiber price.
• Faisalabad trading market remained close in term of sale and no yarn buying reported from mill. All was waiting for Tax issues and no sale made.

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

Export Yarn:

• Prices showed improvement in export markets. Major reason was improvement in talks between US-CHINA which kept cotton prices stable. Moreover as china is largest importer of yarn from Pakistan, India, Vietnam and Indonesia but due to unstable economic conditions in china, business had been turbulent and many orders got cancelled. However, things are getting slightly better after fruitful dialogue between US- CHINA during G-20 and we might see improvement in business activity in days to come.
• Market showed better activity in terms of orders confirmations as customers have been in the market and checking prices. US_ China trade war is expected to go under positive developments. Although its too early to say something thing but market experts are of the opinion that there might be improvement in relationship between 2 countries.
• Suppliers are getting comfort after getting LC’s of recently sold orders as well as June pressure to dispatch stocks is also over. Hence, we might see betterment in activity and prices. European customers remained under dullness. Good level of enquiries is under discussions and we might see order materialization this week.
• 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 remained stunned and standstill due to high volatility of Pak rupee. Buyer floated limited inquires in the market and weavers also hesitant to offer owing to lack of currency direction. Limited business materialization reported in the market at increased price level. Approximately 2%~3% price increment reported in the market.
• Major weavers are offering end July for narrow width and mid-August. Onward for wider width looms. However special looms delivery available by end August/early September on ward.

Local fabric prices of regular items are as follows:

20×16/128×60=63”at USD 1.11 to 1.13 per yard, 16×12/108×56=63” in range of USD 1.20 to 1.22 per yard and 20×20/108×58=63” was sold in range of USD 0.93 to 0.95 per yard based on ex mills.

Export Fabric:

• Overall slow market sentiment was seen during the week from Far Eastern markets. Korea, China customers have exchanged limited number of inquiries resultant selective business. Bangladesh market is active now a days as customers are looking to book bulk quantities. Japan, Malaysia, Thailand, Vietnam and Hong Kong markets remained mixed. Asking prices were same without any change. Good suppliers are booked till mid of Aug whereas average suppliers are booked till end of July and offering early ~ mid Aug onward deliveries. It is expected that business activity may remain selective due to lean season.

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 1.22 to 1.24 per yd and 20×20/108×5863” in range of USD 0.93 to 0.95 per yd based on CNF Far Eastern ports.

• European customers were slow during the week as limited inquiries were received however few markets especially Portugal and Italy was active as customers have exchanged good number of inquiries resultant good quantity booking in the market. Wider width suppliers have further extended their sales coverage and now offering end Sep onward deliveries. USA market was active as customers are discussing good volumes in the market. Suppliers are expecting slow business in coming days both from Europe and USA.

Bed Linen & Towels:

• Bed Linen & Towels business activity has seen further improvement during last week. Customer floated handsome inquiries in the market & maturity of business has improved.
• US customers were floated good inquiries matured. European business was even better. Customers placed new orders due to fluctuation of Pakistani currency benefiting exports.
• 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:

• Pakistan Apparel Industry is observing consistent seasonal loading from different markets of the world. High fashion end stream is getting good attraction and this percentage of business will certainly contribute in value added business.
• All big groups have already booked their periodic placements. This lead will further strengthen the industry’s core strength which is predominantly cotton rich fabrics as well as the finishes and washes.
• Price points have been one for the main interest of the buyers. Factories have space to offer deliveries from sixty days onward for basic items and for fashion items lead time is being offered from eighty days to ninety days

Going Forward:

• In local yarn market it is expected that yarn market will come under sale pressure in early-mid July due to slow buying mood from buyer. Further price trends of yarn will be according to demand and supply of different counts which will lead price level.
• In Local Fabric Market due to the high volatility of pak rupee and limited flow of inquiries may keep market sentiments slow.
• In Export Fabric Market the Fareastern side remained mixed with limited activity from few markets. European markets were slow however USA is still active with good volume.
• In Bed Linen and Towels market it has been stable and seen good activity in the market, keeping in view current market scenario it looks as if business will further improve if prices remain stable.

• Factories in Pakistan are getting attraction from export market as most of the apparel business has started shifting from Bangladesh and China.