Market Report – Pakistan 7 Oct 2019

Local Cotton Highlights:

• In the local cotton market, during the last week, moderate buying has been observed. Low quality and damaged crop have pushed the buyers to continue procuring fine quality lint. Unfavorable weather conditions, attack of Locusts, pests and viruses has decreased the production of cotton due to which type of uncertainty has been created among the buyers and the mills. Therefore, many mills were trying to cover their stocks of fine quality lint.
• According to the estimates released by PCGA, total production of cotton till October 1, is 29 lac (2,900,000) bales as compared to 40 lac 20 thousand (4,020,000) bales during this period last year. The cotton production this year is 27.04 % less than last year. Moreover, according to the estimates presented in the first meeting of the Cotton Crop Assessment Committee (CCAC) one crore 2 lac (10,200,000) bales will be produced which is less by 48 lac bales (33% less) than the initial estimates of one crore 50 lac (15,000,000) bales. The local textile and spinning mills need one crore 45 lac to 50 lac (14,500,000-15,000,000) bales which means they will be spent 1.5 billion dollars of foreign exchange to import 45 lac bales from abroad.
• According to the estimates of the importers up till now agreements of import of 15 lac bales from abroad have been signed. Mills are trying to import USA cotton maximum as possible.
• Prices were almost on the same levels due to the normal buying and didn’t show any major changes during the week. The Karachi Cotton Association (KCA) spot rate was stable at the level of 8700 per maund. Moreover, in the international cotton market mixed trend has been observed. There was a slight increase observed in the rate of New York Cotton due to two reasons; firstly, the export of cotton increased by 15 % as compared to last week and the second reason is the hope of softening of China and America trade conflict in the coming days.
• Prices of seed cotton (Kapas/Phutti) for the new crop (2019-2020) in Sindh were in the range from Rs 3700 to Rs 4000 per 40 Kgs and new crop phutti is available from Sindh in range from Rs 7850 to Rs 8800 per maund (37.32 Kgs).
• In Punjab prices of seed cotton was in range from Rs 3800 to Rs 4150 per 40 Kgs and new crop phutti is available from Punjab in range from Rs 7950 to Rs 8900 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. (7,850~8,900/ 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 rising trend in this week and closed on higher side by the end of the week.

At last day of the week, DEC 2019 closed at 61.67 with increase of 84 points.

At last day of the week, MAR 2020 closed at 62.42 with rose of 87 points.

At last day of the week, MAY 2020 closed at 63.26 with upsurge of 81 points.

Liverpool Index:

A was opened at 71.15 with downward level from previous week’s closing figure.

• In this week Index “A” showed higher trend in this week, although dropped in one session but closed on positive side.
• At last day of the week, LPI “A” closed at 71.95 with increase of 80 points as of opening figure of the week.

Crude Oil:

Crude Oil prices opened at USD 54.07 with lower level as compared to last week closing figures.

• In this week, crude oil price showed downward trend in this week, hence recovered on closing but still close on negative side at the end of week.
• In last day of the week, Crude Oil price closed at USD 52.81 with decrease of USD 1.26 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 positive note with figure of 1.10 and British Pound also closed on positive note with figure 1.23 against USD.

Local Yarn:

• Local yarn market remained stable and firm with reasonable activity during this week ended. Most of mills sold yarn and remained firm in calling as raw cotton prices were firm and PCGA reported that crop size is short as compared to last year. On the other hand, weavers tried to cover yarn against their target and denim mills reported good activity.
• PSF prices dropped Rs.3/kg by 30^th September 2019. In China PSF prices dropped and internationally crude oil prices also were in declining trend and same followed by raw material PTA and MEG. During this week it is expected that some correction in PSF is expected in the 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 in the market and expecting some upward trend in the near future.

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

Export Yarn:

• Market remained dull and slow with limited business activity. Suppliers are getting firm due to upward trend in cotton prices in domestic market and increased price. However, customers are still resisting and not showing any increase in their target prices.
• Cotton in Pakistan showed upward trend due to very good demand from spinners as well as recent rains damage some area of cotton belt. Hence, we might see cotton prices firm and stable with upward tone for the remaining season.
• It is expected that price will show improvement in days to come. Chinese customer remained closed due to national holidays. HK customer are checking prices but order materialize is quite dull. European customers are floating enquiries as per their demand. However, their price idea is still no lower side against than supplier asking prices. Hence, very few deals were closed as customers are showing interest and orders will be confirmed in days to come.

Local Fabric:

• The local fabric market remained slow and steady throughout the week for both narrow and wider width fabric markets. Weavers received limited inquiries for both widths and resultantly limited business materialization reported in the market whereas weavers raised their asking by 1% but orders confirmed at last week price level after tough negotiations.
• Narrow width looms are booked till early~mid November whereas wider width looms are booked till end November ~ early December’2019 and onward deliveries are available with all major suppliers. Dobby looms are booked till End February~March’2020 and weavers are not interested to book further quantities.

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:

• Suppliers have received good inquiries from various parts of the Far East however booked limited quantities in Korea, China, Japan and Bangladesh. Customers were looking for 4~5% lower prices than the existing level hence only few suppliers could manage customer desired price of about 2~3% less than the market prices.
• Customers are still discussing bulk orders at low prices considering that prices may came down but suppliers have opinion that raw material prices are firm rather getting upward so it seems that prices may not come down. Good suppliers are booked till end of Nov and offering early Dec onward deliveries whereas average suppliers are booked till mid of Nov and offering end Nov deliveries. It is expected that business activity will improve and prices may remain firm with upward trend.

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 1.16 to 1.18 per yd and 20×20/108×5863” in range of USD 0.88 to 0.90 per yd based on CNF Far Eastern ports.

• Comparatively a smaller number of inquiries were received from European countries. Some booking was done with the customers in Italy, Portugal and Spain customers gave targets at 4~5% lower than the current prices mainly in wider width fabric. Good activity was observed from USA buyers as customers have booked decent quantities with their selected suppliers of airjet and Sulzer looms.
• Finished fabric business is improving in Pakistan as there were good demand in whites.
• Wider width suppliers are comfortably booked till mid of Dec and offering end Dec deliveries. Dobby loom suppliers have good orders in hand thus they are offering Jan onward deliveries. It is forecasted that business activity will improve from Europe and USA in coming days.

Bedding & Towels:

• The market remained firm during last week. European and other sector customers floated good inquiries in the market and placed new orders. USA Market, customers also floated good inquiries and placed reasonable orders, order placement from USA market will be good.
• European market business placement is also going to get better gradually.
• Jersey bedding orders are also increasing in Pakistan and customers are placing good orders in Plain dyed, Printed and in different dyeing techniques like cross dyed or marle effects.
• Prices were almost stable and did not observe any significant change.  keeping in view current market situation it looks as if the prices will remain at current level and there will be no change in prices in the upcoming weeks.
• As far as shipments are concerned supplier are offering 60 to 70 days for new orders & for repeat orders suppliers are offering 50 to 60 days.

Garments:

• Various strategies have been used by the garment manufacturers according to the competition situations in domestic and global markets. In recent time garment manufacturers have made investments in different resources enhancement areas like power generation, IT and R&D.
• With the increased technology in prints and designs factories are getting response from buyers to show them different options to select and place orders.
• The industry turns out various kinds of garments for men, women, boys such as plain/embroidered/printed dresses, blouses, maxies, shirts, skirts, night dresses, track suits, middies, trousers, sub-dresses etc.
• Factories are offering end December onward deliveries for the inquiries in hand at the moment.

Going Forward:

• In the Local Yarn Market, it is expected that yarn market will be remain stable and firm for next week, and price will remain the same with minor difference. Further bulk cotton arrival will determine the prices of raw material for next season and price trends of yarn will be according to demand and supply of different counts which will lead the price level.
• In Export Yarn the market will remain slow with nominal business activity.
• The Local Fabric Market is expected to remain firm and slow with range bound movement for coming weeks for both narrow and wider width fabric markets.
• In the Export Fabric Market good business has been observed from Far Eastern markets at lower prices than the existing level. European sector was mixed in trading activity mainly in wider width fabric. USA buyers were active with decent booking. Finished fabric business is growing in Pakistan mainly in whites for USA market.
• In Bedding & Towels market the trends are showing better business placement, the market will remain stable in coming days.
• In the Apparel market with investments made by garment factories on infrastructure they have catered well to customers’ need and a very flourishing and healthy wave is expected to come for factories in Pakistan in terms of further order placements.