Market Report – Pakistan 16 Sep 2019

Local Cotton Highlights:

• In the local cotton market, during the last week, trading remained slow but after the increase in supply of Phutti since Thursday the trading volume has increased. Cotton crop was slightly effected by rains specially in the Sindh region. On the other hand, news of attack of viruses and insects on crop especially Milli Bug, Pink Bollworm and White Flies has been heard of.
• The Federal Board of Revenue (FBR) Pakistan has imposed 10 percent sales tax which is paid by textile sector through ginners due to which there is uncertainty in the market, where mainly uncertainty prevails among ginners because mills are not cooperating. Chairman PCGA Mian Mahmood Ahmad had discussed the matter with chairman FBR and related officials a few days ago in which they assured him that 10 percent sales tax will be directly collected from mills but up till no notification was issued in this regard. In this situation, the ginners were not happy.
• The prices of cotton increased by the end of week and rose from 100~200 rs per maund due to the interest of spinning and textile mills in buying and decrease in the supply of Phutti. Increased in international market was also seen due to decrease tension in America and China trade conflict. The Karachi Cotton Association (KCA) spot rate (2019-2020) increased Rs. 100 and touched the level of 8200 per maund. According to the weekly report of New York cotton there is a decrease in the export and increase of three American cents was witnessed in the Rate, while the rate of cotton increased in China and India.
• It is expected that this year cotton crop will be at 12.0 million bales while some people related to cotton crop farming are saying that the output will be less. Up till now these are estimates but real outcome will be determined in the first week of October.
• 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 7850 to Rs 8500 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 7950 to Rs 8650 per maund (37.32 Kgs). Overall deals were made between the range of USC 61~68 Lbs. (7,850~8,650/ maund).

New York Cotton Futures:

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

At last day of the week, OCT 2019 closed at 61.63 with increase of 251 points.

At last day of the week, DEC 2019 closed at 62.28 with rose of 330 points.

At last day of the week, MAR 2020 closed at 62.78 with upward of 319 points.

Liverpool Index:

A was opened at 70.65 with higher level from previous week’s closing figure.

• In this week Index “A” showed higher trend and closed on positive side.
• At last day of the week, LPI “A” closed at 73.55 with increase of 290 points as of opening figure of the week.

Crude Oil:

Crude Oil prices opened at USD 57.85 with higher level as compared to last week closing figures.

• In this week, crude oil price showed mix trend in this week and closed on negative side at the end of week.
• In last day of the week, Crude Oil price closed at USD 54.85 with decrease of USD 3.00 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 positive note with figure of 1.11 and British Pound also closed on positive note with figure 1.25 against USD.

Local Yarn:

• Local yarn market opened after Ashura holidays with same price levels and later a jump in NYC was seen. Mills are covering day to day sales and do not have bulk stock pressure. On the other hand, weavers are handsomely booking for their running orders.
• PSF prices remained stable in domestic market for this week ended. Import fiber polyester stable in international market which cause to maintained local fiber prices. PTA, MEG price remains stable during this week, crude oil graph in International market also remained stable for this week. For next week it is also expected that price will remain stable in local market.
• Faisalabad trading market remained close in term of sale and no yarn buying reported from mill in un registered sector. Some exporter made good trade in 31/1pc and delivery remained short and prices also jumped up in specific count due to good demand in market.  Faisalabad based supplier have already shifted their production to registered sector.

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

Export Yarn:

• Market remained under sluggish business activity with limited order confirmations. Suppliers are getting firm due to upward trend in cotton prices in international market which puts the impact on domestic cotton prices as well. Hence, suppliers are expecting increase in prices. Over all asking prices have been increased by 4-5% but customers are still not responding.
• We might see improved business activity in coming weeks as customers might increase their idea prices to get orders. Moreover, demand from European countries are also picking up which is another factor of firmness at supplier end. It is expected that the market will move in positive direction now as it has already touched rock bottom level and now price will start rising.
• Korean customers remained silent and no enquiry was received. HK customers just floated few enquiries for price checking but no order was reported. However, we might see orders placements in weeks to come. Chinese customers remained in the market and kept of floating enquiries. Few deals were reported where suppliers matched customer required prices. However, it seems business activity will pick up in weeks to come as customers are showing interest and orders will be confirmed in days to come.

Local Fabric:

• In current week under review the local fabric market remained stable and steady for both narrow width & wider width fabric markets. Limited inquired shared by the buyers and against those limited orders confirmation observed at last week price level for both narrow and wider width fabric markets.
• Narrow width looms are covered till 3^rd week October and wider width looms are booked till early ~ mid-November’ 2019 and offering onward deliveries.

Local fabric prices of regular items are as follows:

20×16/128×60=63”, in range of 1.08 to 1.10 per yd, 16×12/108×56=63” between USD 1.17 to 1.19 per yd and 20×20/108×5863” in range of USD 0.88 to 0.90 per yd based on CNF Far Eastern ports.

Export Fabric:

• Far Eastern markets showed little bit of improvement in business trading by early of the week and then went quite due to their holidays. Korea, China, Japan and Bangladesh customers have shown interest and bought decent quantities in basic to medium qualities. Other customers from Vietnam, Sri Lanka and Thailand remained aside of buying.
• Prices remained stable during the week despite of softness in raw material prices. Good suppliers are booked till mid of Oct and offering end Oct onward deliveries whereas average suppliers are offering mid Oct ~ 3^rd week of Oct onward deliveries. It is forecasted that business activity will improve from next week onward.

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

20×16/128×60=63”, in range of 1.08 to 1.10 per yd, 16×12/108×56=63” between USD 1.17 to 1.19 per yd and 20×20/108×5863” in range of USD 0.88 to 0.90 per yd based on CNF Far Eastern ports.

• European customers are back after their summer vacations and sent good number of inquiries during the week. Germany, Italy, Portugal and Spain markets were active as decent quantities were booked during the week. USA market was active as bulk quantity of inquiries were received and some orders were also booked both in narrow and wider width.
• Wider width suppliers are comfortably booked till mid of Nov and offering end Nov onward deliveries. Good trading activity is expected from Europe and USA in coming days.

Bedding & Towels:

• Home textile market remained firm during last week. European and other customers floated goods inquiries in the market & started to place new orders after coming back from holidays.
• USA Market customers floated good inquiries and they have placed few good orders which were under discussion but they held their bigger orders due to the upcoming market week. Market week will start in this week and customers will discuss new orders during the market week. Hopefully after-market week order placements from USA will significantly increase. European customers are also picking up their pace after the holidays.
• Jersey bedding orders are also increasing in Pakistan and customer are placing good orders in Plain dyed, Printed and in different dyeing techniques like cross dyed and marle effects.
• As far as shipments are concerned suppliers are offering 60 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. In 2018-2019, Pakistan’s largest export industry was the textile industry, with hosiery and readymade garments contributing 3.47 billion USD to total trade. Of the grand total from exports, hosiery earned 13% of total exports and readymade garments contributed 11%.
• 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.
• On average factories have space to offer deliveries from end November onwards. Prices of raw material are showing a soft trend during last couple of weeks which is a motivating factor for further booking for readymade garments.

Going Forward:

• In the Local Yarn Market, it is expected that the market will be remain stable, and prices will be remain same with minor difference and business will be according to count to count and brand to brand in the market. Further bulk cotton arrival will determine the price of raw material for next season and price trends of yarn will be according to demand and supply of different counts which will lead price level.

• The Export Yarn Market remained slow but it is projected to pick up as demand is good. On the other side, cotton prices are also bullish which may push buyer to book orders.
• The Local Fabric Market moved in a cautious mode and expected to remain in same mode for coming weeks for both narrow and wider width fabric markets.
• Far Eastern markets improved as some quantities and basic items were booked. Europe and USA buyers were active and booked decent quantities.
• Overall, The Bedding & Towels market trend shows better business placements from different sectors.
• Apparel industry in Pakistan is getting a healthy response from export market with sizeable order placements.