Market Report – Pakistan 28 Oct 2019

Local Cotton Highlights:

• During the last week, in local cotton market, hectic cotton buying has been experienced by the spinning sector and supply of Phutti has also increased due to which the trading volume has increased. NYCF has also been the major cause behind the improved local activity.
• The rate of cotton has increased and touched the highest levels of this season. Good quality cotton increased from Rs 100 to Rs 200 per maund. The Karachi Cotton Association (KCA) spot rate increased Rs.200 and touched the level of 9200 per maund.
• According to the report Pakistan was the second largest importer of American cotton after signing export agreements of 44,000 bales. Bearish trend was witnessed in the Chinese cotton market.
• 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 8700 to Rs 9450 per maund (37.32 Kgs). In Punjab prices of seed cotton was in range from Rs 3800 to Rs 4500 per 40 Kgs and cotton is available from Punjab in range from Rs 8700 to Rs 9500 per maund (37.32 Kgs). In Balochistan, seed cotton prices were in range of Rs 4100-4600.Overall deals were made between the range of USC 68~74 Lbs. (8700~9,500/ 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 and firm trend in this week, although dropped in 2^nd last session slightly but recovered on closing, by the end of week closed on higher side.

At last day of the week, DEC 2019 closed at 64.90 with increase of 34 points.

At last day of the week, MAR 2020 closed at 65.83 with rose of 49 points.

At last day of the week, MAY 2020 closed at 66.55 with upsurge of 53 points.

Liverpool Index:

A was opened at 75.45 with higher level from previous week’s closing figure.

• In this week Index “A” showed mix trend in this week and at last closed on slight positive side.
• At last day of the week, LPI “A” closed at 75.50 with increase of 5 points as of opening figure of the week.

Crude Oil:

Crude Oil prices opened at USD 53.31 with lower level as compared to last week closing figures.

• In this week, crude oil price showed rising 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 56.66 with increase of USD 3.35 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 1.11 and British Pound also closed on negative note with figure 1.28 against USD.

Local Yarn:

• Local yarn market remained firm in asking prices after increase in local cotton and NYCF last week. Some sale has been made on these price levels and suppliers are in comfortable zone where no mill is carrying stocks or having immediate sales pressure. On the other hand, enquiry floated in limited numbers and only some buyers covered yarn at these price and major customers were waiting for some correction because Pakistani prices are at the moment competitive in region.
• PSF prices remained stable during this week ended. In China PSF prices were stable and internationally crude oil prices also softened and same was followed by raw materials like PTA and MEG. For next week it is expected that price will remain soft and 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 the looms were running on blended yarns, and have now shifted to cotton yarns where activity has improved in market for fine counts yarn with reasonable demand and traders expecting firm prices in near future.

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

Export Yarn:

• Market showed continuous hike in prices in cotton as well as yarn. Cotton prices showed upward tone in domestic as well as international markets. At the same time, customers also kept on responding positively against such enquiries and order materialization has been witnessed. We might see good business activity in days to come as well.
• Major reason for this bullish sentiment was successful trade deal between China and US which pushed prices on higher side. It might put further upward trend after another session of discussion between US-China in November second week. 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 kept on checking price for knitting yarns. However, orders are expected to be placed in the next week. Chinese customers remained active and kept on buying for November deliveries. However, for December, as their Duty Free structure on import of yarn form Pakistan is not clear, they did not show much interest. We might see good orders placements for November shipment in days to come.
• European customers remained in the 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:

• The local fabric market remained slow but bullish trend observed throughout the week for both narrow and wider width looms.
• Buyers floated limited inquires in the market and limited business materialization reported in the market after tough negotiations but at increased price level approx 1.5%~2%.
• Major weavers are offering early December onward for narrow width and end December/early January onward for wider width looms

Local fabric prices of regular items are as follows:

20×16/128×60=63”at USD 1.11 to 1.13 per yard, 16×12/108×56=63” in range of USD 1.20 to 1.22 per yard and 20×20/108×58=63” was sold in range of USD 0.92 to 0.94 per yard based on ex mills.

Export Fabric:

• Far Eastern markets are slow these days as no bulk inquiry is under discussion. Some of the customers have shown interest but their price expectations were about 4~5% less than the market prices hence no order was witnessed. Far Eastern customers have slowed down their shipment due to, too much stock with them as their final customers are not lifting their ready stocks.
• Good suppliers are booked till end of Nov and offering early ~ mid Dec onward deliveries. Average suppliers are offering end Nov ~ early Dec onward deliveries. It is expected that order situation may remained mixed in coming days and prices may remain firm due to increase of raw material prices.

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.

• Average business activity was observed from European customers. Most of them are looking for very low prices which were difficult to manage resultant limited buying was noticed. USA market was also mixed as some of the customers have bought mainly wider width fabric. Narrow width business is still slow.
• Asking prices remained firm because of increase in raw material prices. Wider width suppliers are offering end Dec ~ mid Jan onward deliveries due to comfortably booking with them. Suppliers are expecting improved business activity in coming days.

Bedding & Towels:

• Bedding & Towels market has remained firm and stable. There wasn’t any significant change in the market. European and customers from other regions have floated good inquiries in the market but order finalization wasn’t much seen, where USA Market was firm, customers floated their normal routine inquiries and ratio of placement of orders observed was normal, mainly due to the increase in prices.
• Prices trends has been on the upward trend in the last week due to an increase in cotton prices.prices are up by 2 to 3% and are on the verge of increasing further if the yarn prices keep going up during this week.
• As far as shipments are concerned suppliers are offering 60 to 70 days for new orders & for repeat orders suppliers are offering 50 to 60 days.

Garments:

• Pakistan Apparel Industry is observing consistent seasonal loading from different markets of the world.  Apparel manufacturers are keen to develop and explore the garments business by using various strategies according to the competition situations in domestic and global markets.
• All big manufacturers have already booked their periodic placements. This lead will further strengthen the industry’s core strength which is predominantly reliant on cotton rich fabrics as well as the finishes and washes.
• Attractive prices are grabbing buyers’ interest to place further orders. Factories are offering January onward deliveries according to their available capacities and as per design of the garment.

Going Forward:

• In Local Yarn it is expected that the market will be remain firm and stable during this week, and price will remain firm with minor differences. Business will be according to count to count and brand to brand in market. Further PAK cotton arrivals have been reported to be short which will lead the price levels to new heights.
• In Export Yarn the market remained firm and stable with upward note. We might see same sentiment in days to come with good business activity for export acceptance but with prices to further increase.
• In Local Fabric Market in coming weeks limited flow of inquiries may keep the market sentiments slow in the local fabric market.
• In Export Fabric the Fareastern markets remained dull with negligible activity however European markets were mixed in trade. USA market was active and expected good activity from Europe and USA in coming days. Prices are expected to remain firm.
• In Bedding & Towels market stablility for now has been observed but prices are rising and business placement will be varying due to the same reason. Right now, it’s the right time to buy but in days to come the prices will go up considering shortfall of PAK cotton.
• Apparel industry in Pakistan is getting a healthy response from export market with sizeable order placements.