Market Report – Pakistan 11 Nov 2019

Local Cotton Highlights:

• During the last week, In the local cotton market, cautious buying was seen due to the quality factor. Buyers were interested to buy fine quality lint due to the quality issue they were away from buying, although cotton crop will also be low.
• The rate of cotton decreased slightly by Rs 100 to Rs 200 due to the less interest of buyers. The Karachi Cotton Association (KCA) spot rate decreased Rs.100 and touched the level of 9300 per maund.
• According to the weekly report of USDA during the last week increase of 52 percent was witnessed in exports while the level of trade conflict between China and America is also decreasing, despite of that, the New York Cotton was not increased as expected.
• Cotton production in India for the year 2019-20 will be satisfactory. The bearish trend continued in Indian cotton market while the rate of cotton remained stable in China.
• This year in Pakistan cotton production was low due to the untimely rains, extreme hot weather and due to the attack of different viruses and worms. In many areas cotton crop was attacked by Locusts due to which the cotton production as well as quality was badly affected. According to news 90 ~95lac bales of cotton will be produced in current season.
• According to the estimates of Pakistan Cotton Ginners Association 61 lac bales are produced till November 1 this year as compared to the production of 77 lac bales during last year which is 16 lac bales almost 20 percent less.
• This year due to the exceptionally low production of cotton 50 lac to 60 lac bales of worth one billion 60 crore dollar will be imported.
• Prices of seed cotton (Kapas/Phutti) in Sindh were in range from Rs 4100 to Rs 4600 per 40 Kgs and cotton is available from Sindh in range from Rs 8900 to Rs 9600 per maund (37.32 Kgs). In Punjab prices of seed cotton was in range from Rs 4200 to Rs 4700 per 40 Kgs and cotton is available from Punjab in range from Rs 9000 to Rs 9700 per maund (37.32 Kgs). In Balochistan, seed cotton prices were in range of Rs 4200-4900.Overall deals were made between the range of USC 70~76 Lbs. (8900~9,700/ maund).

New York Cotton Futures:

• New York Cotton futures opened on lower levels on Monday as compare to previous week’s closing figures.
• NYCF increase in next session and then dropped in one session later showed upward trend till closing, hence, by the end of week closed on positive side.

At last day of the week, DEC 2019 closed at 64.72 with increase of 106 points.

At last day of the week, MAR 2020 closed at 66.57 with rose of 130 points.

At last day of the week, MAY 2020 closed at 67.77 with upsurge of 125 points.

 Liverpool Index:

A was opened at 75.25 with lower level from previous week’s closing figure.

• In this week Index “A” showed mix trend in this week and at last closed on positive side.
• At last day of the week, LPI “A” closed at 74.70 with increase of 245 points as of opening figure of the week.

Crude Oil:

Crude Oil prices opened at USD 56.54 with higher level as compared to last week closing figures.

• In this week, crude oil price showed upward trend although dropped in one session but was positive 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 57.24 with increase of USD 0.70 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 1.28 against USD.

Local Yarn:

• Local yarn market went stable during this week ended with limited business activity. Most of weavers went quit in their buying anticipating some correction due to NYCF and PCGA Cotton figures reported minimize shortage compare to last year. Most of Suppliers were interested to make sale on these rates but limited numbers sale they booked.
• PSF prices dropped Rs.2/kg by 4^th November 2019. 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 or soft trend of PSF expected in domestic market.
• Faisalabad trading market reported limited business for un-register sector after extension of ID card date by Govt. Most of traders were making limited booking and was trying to sell in market for same before next buying. In cotton yarn fine counts, reasonable activity reported.

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

 Export Yarn:

• Market remained firm and stable with handsome business activity. Customers kept on checking prices and placed orders as well where they achieved their desired price levels. There has been improvement in prices from supplier due to upward note in cotton prices in Pakistan.
• Pakistan cotton prices are continuously on rise due to lack of good quality crop and short in size. Hence, suppliers kept on increasing prices and in response to that, customers also placed order.
• Korean customers remained silent and no such business activity was witnessed. HK customers also remained slow and limited numbers of enquiries were floated against which order materialization was dull as well. Chinese customers are only showing interest in placing orders for November shipments for the reason that status for Duty free on Pakistan yarn is yet to be renewed. So, customers remained active to book November shipments but for December no orders placements were witnessed.
• European customers floated good numbers of enquiries. However, order confirmations were slow due to gap in asking and bidding prices. However, good numbers of enquiries are under discussions and we might see order placements in days to come.

Local Fabric:

• In current week under review the local fabric market showed slight upward trend whereas limited activity reported at approximately 1~2% increased prices for both narrow and wider width fabrics.
• Weavers received inquiries with increased flow from their customers as compared to last week and local brands remained active throughout the week for their summer collections.
• Major weavers are booked in narrow width till early December~mid-December’2019 whereas wider width looms are booked till end Jan ~ end February’2020 and offering onward deliveries.

Local fabric prices of regular items are as follows:

20×16/128×60=63”at USD 1.13 to 1.15 per yard, 16×12/108×56=63” in range of USD 1.22 to 1.24 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:

• Far eastern markets are continuously showing now interest in buying since last couple of weeks due to slow demand from their end customers. Increased in prices could be another factor for the Fareastern customers as they are not into buying. Korean customers are still holding the ready stocks with their suppliers. Limited inquiries were received from China, Japan and Bangladesh resultant limited buying during the week.
• Asking prices further up by 1~2% due to hike in raw material prices however it seems that prices may slash sown a little bit in coming days due to no response on offers. Currently good suppliers are booked till end of Dec and offering early Jan onward deliveries. Average suppliers are booked till mid of Dec and offering end Dec deliveries. Suppliers are expecting slow market sentiment in next week as well and situation may get better towards after a week time.

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.

• Suppliers are getting good supports from their regular customers in Italy, Germany and Portugal whereas other markets remained slow and dull. Prices for wider width also increased about 2% due to increase of raw material prices. Suppliers will get their booked cotton ( raw material) from USA, Brazil, Australia and other cotton growing countries which till end of Dec which will help to stabilize the raw material prices. Currently raw material prices are historically high in Pakistan.
• Wider width suppliers are comfortably booked till Jan and offering Feb onward deliveries. USA market remained mixed with limited buying activity during the week. It is expected that wider width business will remain good in coming days and European customers will continue buying to secure their deliveries.

Bedding & Towels:

• Market remained Stable in terms of order placements. European and other regions customers Floated Inquiries in Market. customers sent inquiries for new requirements keeping in view markets trends. Some customers placed few orders for new designs or repeat orders for running articles which are going sold well.
• USA Market was active, customers were floated good inquiries and placed orders for spring season on those articles where suppliers meet their target prices. Response on current quoted prices observed slow due to the increase in prices in last week. For future placements customer is silent and in Wait and see mood.
• Prices trends was on upward in last week due to increase in cotton prices. Cotton prices are increasing and due to this fact prices already almost 2 to 3% have been increased. keeping in view current market situation it looks that prices will be further increased if cotton prices not stable in future.
• Although Suppliers have good orders in hand but still, they are under sales pressure because supplier have available space against their production facilities so to full fill their production capacities 100%, they are trying to get maximum orders from different customers / markets, even in some cases suppliers are offering good prices keeping in view order quantities. As far as shipments are concerned supplier is offering 80 to 90 days for new orders & for repeat orders supplier are offering 60 to 65 days because all weaving mills are booked up to end December and greige fabric delivery for new orders is available from weaving  in start of January 2020. So, supplier is offering few days more as compared to the past required delivery time.

Garments:

• Pakistan Apparel Industry is observing consistent seasonal loading from different markets of the world. High fashion end stream is getting good attraction and this percentage of business will certainly contribute in value added business.
• Textile exports during 2 months of FY20 increased 2.3 percent year on year against a growth of 3 percent in total exports during the period.  Growth in textile exports was largely driven by downstream retail items, which are typically higher on the value chain namely knitwear, bed wear and ready-made garments. They together constitute more than 50 percent weightage within the textile group and a 38 percent share in total exports.
• Volumetrically, readymade garments increased 35 percent while price per unit dropped 20 percent during the first two months of FY20 as compared to the corresponding period. Currently factories have space to offer deliveries from early February onward.

Going Forward:

• In Local Yarn 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 shortage of raw cotton in domestic market will support prices of yarn, and price trends will be according to demand and supply of different counts which will lead price level.
• 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 we may forecast upward trend for coming weeks for both narrow and wider width looms.
• In Export Fabric Fareastern markets may remain slow and dull for couple of weeks. European customers are responding well hence good business activity was observed during the week. USA market expected to remain mixed with limited orders.
• In Bedding & Towels market was stable and business placement from different sectors was satisfactory but keeping in view current market Statics and as per forecast Customer will buy in coming days to avoid any price increase in current price levels.
• Apparel industry in Pakistan is getting a healthy response from export market with sizeable order placements.