Market Report – Pakistan 29th July 2019

Local Cotton Highlights:

• Last week, in the local market, textile mills and buyers showed great interest in procurements due to the increased trend in the prices of new crop of cotton. Spinners were buying in fear that prices will be increased very soon due to the currency deprecation.
• Ginning factories have picked up their operational pace due to the increase in the supply of Phutti in Sindh and Punjab. Up till now the production of cotton crop is satisfactory in Sindh & Punjab.
• The price of local cotton rose from Rs. 150~250 during this week due to the good demand from the buyers. NYCF rising trend also pushed the buyers to keep buying. Further rise in price is also expected in coming days as well. The Karachi Cotton Association (KCA) spot rate (2019-2020) increased Rs.250 and closed at level of 8700 per maund.
• Cotton growers say the government’s aim of getting 15 million bales of cotton may not materialize until it reduces the cash crop’s production cost, announces a support price and bans import of cotton. International Cotton Advisory Committee (ICAC) has declared the cost of production in Pakistan is higher than in India.
• Prices of seed cotton (Kapas/Phutti) for the new crop (2019-2020) in Sindh were in range from Rs 3700 to Rs 4100 per 40 Kgs and new crop phutti is available from Sindh in range from Rs 8000 to Rs 8750 per maund (37.32 Kgs).
• In Punjab prices of seed cotton was in range from Rs 3800 to Rs 4200 per 40 Kgs and new crop phutti is available from Punjab in range from Rs 8000 to Rs 8800 per maund (37.32 Kgs).
• Overall deals were made between the range of USC 61~67 Lbs. (8,000~8,800/ maund).

New York Cotton Futures:

• New York Cotton futures opened on higher level on Monday as compared to previous week’s closing figures.
• NYCF showed upward trend in this week, although minor drop was observed in one session but overall showed rising trend, and closed on a positive side by the end of the week.

At last day of the week, OCT 2019 closed at 64.24 with increase of 145 points.

At last day of the week, DEC 2019 closed at 64.54 with rise of 118 points.

At last day of the week, MAR 2020 closed at 65.46 with upsurge of 131 points.

Liverpool Index:

A was opened at 72.95 with lower level from previous week’s closing figure.

• In this week Index “A” marched upward in this week and at the end closed on positive side.
• At last day of the week, LPI “A” closed at 75.40 with increase of 245 points as of opening figure of the week.

Crude Oil:

Crude Oil prices opened at USD 56.22 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 56.20 with decrease of USD0.02 cents as of opening figure of week.

Pakistan Currency Exchange Rates

• In last week values of Pak rupee depreciated 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 1.11 and British Pound also closed on negative note with figure 1.24 against USD.

Local Yarn:

• Local yarn market remained stable in term of asking and limited business finalized during this week. A downward price trend become stable and average sale was made by the mills. Coarse count export made big support which caused bit of an increase in asking for domestic yarn offers. On the other hand, buyers covered only for their urgent demand yarn and they were not in hurry for bulk buying.
• PSF price dropped by Rs.3/kg in domestic market dated 22^nd July, 2019. Import fiber polyester dropped in international market which cause a drop in local fiber prices. PTA, MEG price remains stable during this week, crude oil graph in International market also remained stable for this week.
• Faisalabad trading market remained closed in term of sale and no yarn buying reported from mill. Some cash sale was made without ID card copy (as per the latest introduced local buying law) but in very limited numbers.  Faisalabad based units have cut their production and trying to sell in register sector for some counts.

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

Export Yarn:

• Market remained under average business tone. Over all the customers floated good numbers of enquiries against which order placements were nominal. Major reason for this was uncertain market conditions. So, customers are only booking urgent required items. Suppliers are offering prices with firm note but all are interested to grab orders. They are in quite a flexible tone upon receipt of any firm bids and they are also confirming orders after handsome negotiations.
• Customers are bidding on lower side considering decline in prices in days to come. Hence, they are not showing interest to increase their prices and orders are confirmed only where suppliers match their prices.
• We might see good business activity from China and other markets in days to come. HK customers remained silent and no such activity has been witnessed. European customers floated good numbers of enquiries. It is expected that there will be good activity from European market in days to come as they might place good numbers of orders before going on holidays.

Local Fabric:

• In current week under review the local fabric market remained relatively calm with slight hint of downward sentiment for both narrow and wider width fabric markets.
• Buyers floated limited inquiries and confirmed some orders after tough negotiations at last week price level. Weavers showing desperation for narrow width orders.
• Currently all major weavers are booked in narrow width till end August/early September’19 and early October’19 ~ Mid October’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 1.11 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:

• The week started with slow demand from far eastern markets and closed with same sentiment. Few inquiries were received from China, Korea, Bangladesh and Japan while other markets like Vietnam, Indonesia, Malaysia and Thailand remained quiet. Prices remained stable during without change.
• Currently good suppliers are booked till mid of Sep and offering end Sep onward deliveries whereas average suppliers are booked till end of Aug and offering early Sep onward deliveries. Suppliers are expecting slow demand from various markets during next couple of weeks however prices will remain stable.

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.

• Slow buying was witnessed from European sectors as most of the customers gone partially holidays. However, few inquiries were received from Portugal, Italy and Germany resultant limited order placement during the week. USA market also remained slow compared to last week.
• Wider width suppliers have good sales coverage while the narrow width suppliers are chasing the orders to extend their sales position. Wider width suppliers are comfortably booked till end of Sep ~ mid Oct and offering end Oct onward deliveries.
• Suppliers are expecting slow demand and business activity from Europe and USA for next couple of weeks due to holiday season.

Bed Linen & Towels:

• The market was firm in the previous week and business activity got better. Customers floated good inquiries in the market & maturity of business was increased as compared to the last 2 or 3 weeks.
• USA and European markets were quite active and customers placed good orders in Bedding and Towels.
• Prices were almost stable and did not see any decrease yet keeping in view current market situation it looks as if the prices will remain stable at current level in the upcoming weeks.
• As far as shipments are concerned suppliers are offering 60 to 70 days for new orders & for repeat orders suppliers are offering 50 to 60 days.

Garments:

• The textile and garment sectors are important components of the country’s manufacturing industry. The garment and textile sector contribute up to 8.5 percent of Pakistan’s GDP and about 70 percent of total exports.
• 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.
• 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 October onward.

Going Forward:

• In Local Yarn Market it is expected that the market will be remain stable or soft and business will be according to the levels of demand generated for counts and brands in the market and bulk cotton arrival will determine the price for next season. Further price trends of yarn will be according to demand and supply of different counts which will lead price level.
• The Export Yarn Market showed slightly better sentiment as suppliers are flexible and interested to grab orders after negotiations of prices. Hence, we might see order confirmations in days to come.
• In Local Fabric Market it is expected that market will remain slow and we can foresee that limited activity will continue to prevail for both narrow and wider width fabrics for coming weeks.
• In Export Market the Far Eastern side has been slow during the week due to slow demand. European and USA markets were also slow compared to last week with limited buying activity.
• The Bedding and Towels market has remained firm and is expected to get better if the yarns and dyeing prices remain at their current level.
• 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.