Market Report – Pakistan 21 Oct 2019

Local Cotton Highlights:

• During the last week, in the local cotton market, panic buying was seen because of rising prices internationally and the news of drastic decrease in local cotton production. The rate of good quality lint increased from Rs 100 to Rs 300 per maund. The rate of Phutti also increased. The Karachi Cotton Association (KCA) spot rate increased Rs.100 and touched the level of 8950 per maund.
• Internationally the increasing trend was witnessed in New York Cotton Futures. American cotton increased by 9 percent as compared to last week due to the news of decrease in tension between America and China. The Rate crossed 65 US cents per pound.
• This year Pakistan remains the second largest importer of American cotton while China has not imported cotton from America during the season. The rate of cotton remained stable in China while the fluctuating trends continued in the rate of cotton from India.
• The new cotton crop of 2019-20 in India has started arriving partially. It is expected that cotton crop in India will increase because of adequate rains.
• According to the estimates released by PCGA 44 lac 40 thousand (4,440,000) bales were produced in Pakistan till October 15 which is 16 lac bales (about 26 .54 percent) less as compared to last year which is critical. Experts are of the view that 90 lac bales of cotton will be produced in the country. The local textile mills will import 50 lac bales of worth 1.50 billion dollars in order to fulfill their needs.
• Prices of seed cotton (Kapas/Phutti) in Sindh were in range from Rs 3600 to Rs 4400 per 40 Kgs and cotton is available from Sindh in range from Rs 8200 to Rs 9150 per maund (37.32 Kgs). In Punjab prices of seed cotton was in range from Rs 3800 to Rs 4400 per 40 Kgs and cotton is available from Punjab in range from Rs 8700 to Rs 9150 per maund (37.32 Kgs). In Balochistan, seed cotton prices were also higher at Rs 4100-4600.Overall deals were made between the range of USC 68~72 Lbs. (8700~9,150/ maund).

New York Cotton Futures:

• New York Cotton futures opened on lower levels on Monday as compare to previous week’s closing figures.
• NYCF showed upward 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 65.16 with increase of 294 points.

At last day of the week, MAR 2020 closed at 65.81 with rose of 263 points.

At last day of the week, MAY 2020 closed at 64.81 with upsurge of 236 points.

Liverpool Index:

A was opened at 71.75 with lower level from previous week’s closing figure.

• In this week Index “A” showed upward trend in this week except of one session, in which its dropped while trend was upward and at last closed on positive side.
• At last day of the week, LPI “A” closed at 75.00 with increase of 325 points as of opening figure of the week.

Crude Oil:

Crude Oil prices opened at USD 53.59 with lower level as compared to last week closing figures.

• In this week, crude oil price showed mix trend in this week and closed on positive side at the end of week.
• In last day of the week, Crude Oil price closed at USD 53.78 with increase of USD 0.19 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 1.12 and British Pound also closed on positive note with figure 1.29 against USD.

Local Yarn:

• Local Yarn Market jumped up from start of this week, after increased in local cotton followed by NYCF. Prices increased by Rs.4~5/lbs in domestic market in yarn counts and some support sale in these rates extended mill sale coverage up to one month around. On the other hand, weavers were ready to buy some quantity against sold order and 40/1 combed was count, which remained in big demand in domestic market.
• PSF prices remained stable during this week ended. In China PSF price were stable and internationally crude oil prices also were in soft trend and same followed by raw material PTA and MEG. For next week it is expected that price will remain stable in domestic market.
• Faisalabad trading market reported limited business for un-register sector. Exporter and register mills were busy in day to day buying on these price levels. Most of looms was running on blended yarn now shifted at cotton yarn and activity improved in market with reasonable demand and traders expecting some upward trend in near future.

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

Export Yarn:

• Market showed upward trend throughout the week due to rising trend in cotton prices internationally. Major reason for this bullish sentiment was successful trade deal between China and USA which has pushed prices on the higher side. China has already placed orders of Cotton worth 1.4 M Bales from US due to which market sentiment is on the hike.
• At the same time there has been good business activity from customer abroad and domestic market and they have placed orders after increasing their target prices. So, we might see handsome business volumes in days to come as customers are taking position for urgent and some forward deliveries in anticipation of further increase in process.
• Korean customers showed slightly better activity and few enquiries were floated. However, orders are yet to be confirmed. HK customers however kept on checking prices for knitting yarns. However, orders are expected to be place in next week.
• Chinese customers remained active and kept on buying for November deliveries. But as for December, because their Duty-Free structure on import of yarn form Pakistan is not clear, so, they didn’t show interest. We might see good orders placements for November shipment in days to come.
• European customers remained in market and kept on sharing good level of enquiries. However, they are still resisting against high offered prices form suppliers and orders were not placed. We might see confirmations in next week.

Local Fabric:

• In current week under review the uncertainty gripped the local fabric market and thus negligible business reported in the market for both narrow and wider width fabrics.
• Buyers floated limited inquiries due to sudden rise in yarn prices as weavers increased their asking by approx 2~3%. Few orders confirmed at increased price level for both narrow and wider width fabrics.
• Majority of the weavers are booked till 3^rd week November~ End November’19 for narrow width looms whereas normal wider width looms are covered till mid-December ~ 3^rd week December19 and special looms are covered till end February ~end March’2020 and onward deliveries are available with all good suppliers.

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:

• Export fabric far eastern markets are very slow and dull now a days. Customers are not taking interest in fresh buying. Limited inquiries were received from Korea, China and Japan with very low target prices which could not materialize. Average booking was noticed from Bangladesh. Asking prices increased about 2% due to hike in raw material prices.
• Currently good suppliers are booked till end of Nov and offering early Dec onward deliveries whereas average suppliers are booked till 3^rd week of Nov and offering end Nov ~ early Dec onward deliveries.
• Since the cotton of this season is short in Pakistan hence suppliers are expecting firmness in prices. Also suppliers have good sales coverage thus softness in prices are difficult. So better to book required quantities to have required deliveries instead of waiting.

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

20×16/128×60=63”, in range of 1.18 to 1.20 per yd, 16×12/108×56=63” between USD 1.30 to 1.32 per yd and 20×20/108×5863” in range of USD 1.00 to 1.02 per yd based on CNF Far Eastern ports.

• European customers remained slow during this week. Limited inquiries were received from Portugal, Germany, Italy and Spain resultant limited buying both in narrow and wider width fabrics. Asking prices remained firm due to firmness in raw material prices. Wider width suppliers are comfortably booked till Dec and offering Jan deliveries. USA market remained slow however limited inquiries were reported towards end of the week having limited booking mainly in wider width. It is expected that Europe and USA market may remain mix in coming days with limited buying activity.

Bedding & Towels:

• The market remained firm with no significant change observed. Ratio of floated Inquiries from European and other regionional customers were healthy and they have sent inquiries for new articles and asked for new developments. Order were also placed for the upcoming seasons.
• Slight increase of prices is to be expected because of increase in yarn prices. Although Suppliers have good orders in hand. 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:

• With the increased technology in prints and designs, factories are getting response from buyers to show them different options to select and place orders. Pakistan Apparel Industry has observed healthy seasonal loading from different markets of the world. High fashion end stream is getting good attraction and business is increasing from export customers.
• 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 sixty days onward for basic items and for fashion items lead time is being offered from eighty days to ninety days.

Going Forward:

• In Local Yarn it is expected that the market will be remain firm and stable for this week week, and price will remain firm with minor difference and business will be according count to count and brand to brand in market. Further 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.
• Export Yarn Market will remain firm and stable with rising trends. We might see same sentiment in days to come with good order placements and prices are expected to show increase of further 2-5%.
• In Local Fabric Market, major players are holding their breath due to short cotton production news and resultantly market activity is expected to remain at halt for the coming weeks.
• In Export Fabric Market, average business activity has been observed from all sectors including Far Eastern, Europe and USA. It is suggested to book required quantities to get required delivery because prices will remain firm with upward trend as there is no sign to reduce the prices at the moment.
• The Bedding & Towels Market will remain stable with which business placement from different regions is seen to remain healthy.
• With the advancement in technology Pakistan’s garment industry is ready to cater to the increased demand of customers from around the globe.