Market Report – Pakistan 30 Sep 2019

Local Cotton Highlights:

• In the local cotton market, during the last week, panic buying of textile mills has been observed, the increasing trend in the prices of cotton continues. The textile mills increased buying due to the news of damage of cotton crop as a result of which the prices of Phutti has also increased. Ginners have increased their rates as well. In order to fulfill their needs, many mills have increased the number of import agreements for the import of cotton from abroad. According to the information up till now mills have signed agreements for the import of 12 lac bales and every day new import agreements are being signed to our notice.
• Due to the current slow arrival, if the same situation persists then against the initial estimates of government’s estimated production of one crore 50 lac (15,000,000) bales, only one crore 10 lac (11,000,000) bales will be produced, because of which the mills will have to import 40 lac bales of worth 1.5 billion US dollars to fulfill their local needs.
• According to the information from Sindh and Punjab, cotton crop suffered due to continuous rains. Moreover, the crop was attacked by viruses and insects and the curing looks difficult and the loss of crop was severe. Farmers saying that due to the use of low-quality seeds the per acre production decreases.
• Hectic buying caused the increase in prices, local cotton prices increased in this week around 300~400. The Karachi Cotton Association (KCA) spot rate increased Rs.100 in this week and closed at the level of 8650 per maund.
• In international cotton market the prices of cotton remained stable. The rate of New York Cotton has not increased despite the USDA weekly export report which shows 83 percent increase. The reason is the satisfactory levels being maintained in the supply. While the cotton production in Brazil and India is also satisfactory.
• India sowing of cotton crop will be 20 percent more as compared to last year. The production of cotton crop in China is satisfactory but due to trade conflict with America trade activities are slow. The buyers haven’t shown much interest in the cotton yarn exhibition held in China.
• Prices of seed cotton (Kapas/Phutti) for the new crop (2019-2020) in Sindh were in range from Rs 3700 to Rs 4150 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 4200 per 40 Kgs and new crop phutti is available from Punjab in range from Rs 7950 to Rs 9000 per maund (37.32 Kgs). In Balochistan, seed cotton prices were also higher at Rs 4200-4700.Overall deals were made between the range of USC 61~70 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 mix trend in this week and closed on lower side by the end of the week.

At last day of the week, OCT 2019 closed at 59.82 with decrease of 01 points.

At last day of the week, DEC 2019 closed at 60.90 with downward of 01 points.

At last day of the week, MAR 2020 closed at 61.63 with drop of 05 points.

Liverpool Index:

A was opened at 71.25 with downward level from previous week’s closing figure.

• In this week Index “A” showed higher trend in this week while dropped in last session, hence closed on positive side.
• At last day of the week, LPI “A” closed at 71.40 with increase of 15 points as of opening figure of the week.

Crude Oil:

Crude Oil prices opened at USD 58.64 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 55.91 with decrease of USD 2.73 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 1.09 and British Pound also closed on negative note with figure 1.23 against USD.

Local Yarn:

• Local yarn market remained stable in term of asking prices and slow in term of business finalization. Most of mills were asking same and were interested to make sale on these rates but buyer kept away from future buying. Only urgent required yarn was booked during this week.
• PSF price remained stable during this week ended. In China PSF price were dropped and internationally crude oil prices also were in declining trend and same followed by raw material PTA and MEG. For next week it is expected that some correction in PSF expected in domestic market.
• Faisalabad trading market reported limited business for un-register sector. Exporter and register mills were busy in day to day buying and market remained stable. Most of looms running on blended yarn and cotton yarn activity remained slow.

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

Export Yarn:

• Market remained under dull and slow situation with limited orders confirmations. Suppliers are getting firm due to upward trend in cotton prices in the domestic market. With which customers are still resisting and not showing any increase in their target prices.
• It is expected that price will show slight improvement in days to come.

Yarn Expo

• Chinese customer remained on the side lines. Yarn Expo also closed with depressing sentiment as customer were not at all active and no business activity was witnessed.
• HK customer are checking prices but order materialization is quite dull. European customers are floating enquiries as per their demand. However, their price idea is almost 3-5% lower than supplier offered prices. Hence, very few deals were closed.

Local Fabric:

• In current week under review the local fabric market week started with slow activity which prevailed throughout the week and week closed with firm tome for both narrow and wider width fabric markets.
• Buyers floated limited inquiries and limited business reported in the market for both narrow and wider width fabric markets at last week price level.
• Narrow width looms are booked till end October whereas wider width looms are till 3^rd week November ~ end November’2019 and offering onward deliveries.

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:

• Mix trading activity was observed during the week under review. Korean customers have exchanged bulk order inquiries which may finalize during next week. Limited inquiries were received from China, Bangladesh, Vietnam and Thailand resultant limited booking observed. Asking prices remained stable due to stable raw material prices.
• Currently good suppliers are booked till mid of Nov and offering end Nov onward deliveries. Average suppliers are booked till end of Oct and offering mid Nov onward deliveries. Suppliers are expecting improved business activity in coming days.

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.

• Good number of inquiries were received from Germany, Italy, Belgium, Portugal and Spain. European customers have taken their interest in fresh buying both in narrow and wider width fabric.  Wider width suppliers have extended their sales till Nov and now most of them are offering Dec onward deliveries.
• Prices for wider width remained stable during the week. USA buyers were active thus they have booked decent quantities mainly in wider width fabric. Suppliers are expecting good quantity of orders from Europe and USA in coming weeks as well.

Bedding & Towels:

• The market was firm in the last week. Inquiry flow has remained healthy from European and other regional customers.
• Buyers from USA have floated good inquiries and have also placed handsome orders for their new designs for the upcoming spring season 2020. And business placement from Europe has also remained good. Customers placed orders for Bedding and Towels keeping in view new season trends.
• Prices slightly increased due to increase in cotton and Polyester prices, which affected the finished product prices as well.  keeping in view current market situation it seems that prices will be locked at its current level if cotton or polyester prices remain stable in the upcoming days.
• 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:

• A significant growth has been observed in knitwear apparel industry of Pakistan. Value-added sector achieved growth because of preferential access to the European Union under the GSP+ scheme which can further be enhanced with the government’s support.
• At the same time Pakistan direly needed to establish an aggressive Marketing Plan for garment export to get maximum benefits of GSP-Plus status.  Apparel sector can play leading role in earning foreign exchange and boosting exports.
• Overall factories in Pakistan are working in their full capacities and offering December onward deliveries. Despite devalued Pak Rupee against US Dollars which has increased the imported raw material cost, factories have not increased the prices of garment to that extent and offering a reasonable charge.

Going Forward:

• In Local Yarn it is expected that the market will be remain soft and stable for the current week, and prices will remain same with minor difference. 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.
• In Export Yarn the market remained under lackluster business activity as suppliers are firm and stable with slight increase in prices but customers are not interested and bidding 3-5% lower than asking prices.
• In the Local Fabric market, it is expected to show firm trend in coming weeks for both narrow and wider width fabric markets.
• In Export Fabric Market from the Far Eastern side which remained mixed with limited buying. European and the USA market remained active thus they have booked decent quantities during the week. Good trading activity is expected in coming days.
• In the Bedding & Towels, overall the market remained firm and business placement was good from various regions. As per the forecast market will improve in the coming days and customers will place more orders for their future requirements.
• Pakistan’s garment industry has huge potential to grow given the emerging opportunities and the support of the government.