Market Report – Pakistan 23 Sep 2019

Local Cotton Highlights:

• In the local cotton market, during the last week, trading activity has improved and buyers showed interest in buying due to fear of further rise in prices. PCGA issued report is showing less arrival of around 26.41 which has also created panic among the buyers. It also seems that the buying will remain good in the coming days because of healthy arrival of quality lint.
• Prices increased during the week to around 500~600. The Karachi Cotton Association (KCA) spot rate took jump in three consecutive sessions 8350 to 8650 while dropped Rs.100 on closing and closed at the level of 8550 per maund.
• Internationally prices are reducing due to the continuation of USA & China conflict. NYCF showed downward trend during the week. Cotton prices went down as top consumers in China canceled orders of US fiber and on forecast for a bumper harvest, although losses were limited by data showing higher US export sales. The export sales are below expectations mostly due to cancellations from China and the weather is really good, boosting crop condition. Prices have fallen nearly 18% so far this year on the backdrop of the protracted trade war between the United States and China, one the leading consumers of the natural fiber.
• Cotton arrival in the start of the current season had witnessed sluggish trend, going down by 0.365 million bales as compared the arrival of the corresponding period of last year. According to the latest data released by the Pakistan Cotton Ginner’s Association (PCGA), by September 15, 2019, the cotton arrival in the local markets decreased by 26.41% as about 1,852,408 cotton bales arrived against the arrival of 2,517,345 bales of same period of last year. The slow crop arrival in the local markets was mainly attributed to the low pricing trend in the markets, coupled with delay in the announcement of the minimum support prices for the crop by the government. The cotton arrival from Punjab also decreased by 38.95% as about 598,314 cotton bales arrived in the market from Punjab as against arrival of 980,139 bales of the same period of last year. Meanwhile, crop arrival from the Sindh Province including Balochistan also remained on the down track as it decreased by 18.42% and was recorded at 1,254,095 bales against 1,537,208 cotton bales of the period under review.
• Prices of seed cotton (Kapas/Phutti) for the new crop (2019-2020) in Sindh were in range from Rs 3700 to Rs 3900 per 40 Kgs and new crop phutti is available from Sindh in range from Rs 7850 to Rs 8900 per maund (37.32 Kgs).
• In Punjab prices of seed cotton was in range from Rs 3800 to Rs 4100 per 40 Kgs and new crop phutti is available from Punjab in range from Rs 7950 to Rs 9000 per maund (37.32 Kgs). Overall deals were made between the range of USC 61~69 Lbs. (7,850~9,000/ 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 downward trend in this week, while slightly recovered on closing, hence closed negative side by the end of the week.

At last day of the week, OCT 2019 closed at 59.13 with decrease of 246 points.

At last day of the week, DEC 2019 closed at 60.52 with downward of 207 points.

At last day of the week, MAR 2020 closed at 61.17 with drop of 179 points.

Liverpool Index:

A was opened at 73.55 with same level from previous week’s closing figure.

• In this week Index “A” showed higher trend in two session while dropped till closing and closed on negative side.
• At last day of the week, LPI “A” closed at 71.50 with decrease of 205 points as of opening figure of the week.

Crude Oil:

Crude Oil prices opened at USD 62.90 with higher level as compared to last week closing figures.

• In this week, crude oil price showed downward 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 58.09 with decrease of USD 4.81 cents as of opening figure of week.

Pakistan Currency Exchange Rates

• In last week values of Pak rupee slightly 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 1.10 and British Pound also closed on negative note with figure 1.25 against USD.

Local Yarn:

• Local yarn market jumped up due to increase in NYCF and raw material prices by start of this week. Spinning mills have increased prices 2~3% and registered good numbers of sale. By end of this week, International sentiment reversal local market went quiet and no activity was made.
• PSF price jumped up twice in this week by Rs.10/kg dated 17^th Sep 2019. Major reason was sharp jumped in crude oil price after attack at KSA oil refinery. International market took immediate effect and China increased PSF prices which became reason for increase domestic prices as well. PTA, MEG prices also followed by oil prices and increased accordingly.
• 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.

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

Export Yarn:

• We are attending the YARN EXPO in China. Stay Tuned.

Local Fabric:

• Rang bound movement observed in current week under review for both narrow and wider width fabric markets. Week closed with limited activity whereas prices remained firm throughout the week. Weavers booked orders after tough negotiations at last week price level due to firm yarn prices. Major weavers are booked in narrow width till end October and covered wider width looms till mid-November’2019 and offering onward deliveries. Whereas wider width dobby looms are booked till February ~ March’2020.

Local fabric prices of regular items are as follows:

20×16/128×60=63”at USD 1.12 to 1.14 per yard, 16×12/108×56=63” in range of USD 1.21 to 1.23 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:

• This week started with good number of inquiries from Korea, China, Japan and Bangladesh but closed the week with dull activity. Most of the customers are holding their deliveries due to too much stock with end buyers. Asking prices were increased by 2~3% due to hike in raw material prices however suppliers were interested to negotiate the prices for good orders. Currently good suppliers are booked till end of Oct and offering early Nov onward deliveries whereas average suppliers are booked till mid of next month and offering end Oct deliveries. It is forecasted that business activity will improve in coming days and prices may get stable.

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.

• Most of the European customers are attending TexWorld and Premier Vision fair held in Paris. It is heard that some of the dyeing units got good orders during the fair. Good number of inquiries were received from Germany, Italy and Portugal which is expected to finalize the orders in coming days. USA market remained active with good inquiry and booking both in narrow and wider width. Wider width suppliers are comfortably booked till mid of Nov and offering end Nov onward deliveries. It is forecasted that good business will conduct both with European and USA buyers.

Bedding & Towels:

• Last week the market remained active as compared to the last 2 weeks. A lot of Inquiries floated from European and other regions customers and hand some orders placed in the market from different regions. USA Market, customers were floated good inquiries as well as they placed new orders which discussed on market week. Market week has been ended and hope customer will be placed further order keeping in view new requirements for the spring seasons in upcoming weeks.
• European markets business placement is also better. Customers placed orders for Bedding and Towels.
• Prices were almost stable and not observed any significant change in current prices. Although in last week cotton and Polyester prices slightly increased but Bedding suppliers did not increase their prices and absorbed price increase to get the maximum orders. keeping in view current market situation it looks that prices will be slightly increase if Cotton or polyester prices increase in upcoming days.
• Although Suppliers have good orders in hand but due to their Production capacities, they are still under sales pressure & trying to fulfill available production capacities to get more orders from different customers / markets, even suppliers are offering very sharp prices to capture bulk orders.
• As far as shipments are concerned supplier is offering 60 to 70 days for new orders & for repeat orders supplier are offering 50 to 60 days.

Garments:

• Different markets of the world have placed seasonal orders in Pakistan’s garment factories. 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 December onward.

Going Forward:

• About future market it is expected that yarn market will be remains firm and stable for next week, and price will be remains same with minor difference and business will be according count to count and brand to brand in 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 local fabric market will tend to be range bound without any risk of downside for coming weeks for both narrow and wider width fabric markets.
• Far Eastern markets was active in start of the week however weekend towards end of the week. Good trading activity was observed from Europe and USA buyers and expected to remain good in coming days as well.
• Overall market is growing well and business placement from different sectors is good and as per forecast market will be good in coming days and customers will place more orders for future requirements.
• Pakistani garment factories have been an attraction from EU and USA market and it is likely that volumes are going to increase in future.