Market Report – Pakistan 18 Nov 2019

Local Cotton Highlights:

• During the last week, In the local cotton market, lack of interest was seen by buyers and spinners, most of the buyers were away from the market. Almost no buyer of low and middle level quality cotton was present in the market.
• Ginners want to sell their cotton as early as possible in order to save themselves from heavy loss. The quality of cotton was already not so good but rains further affected the quality. It seems that cotton of this quality will be used after mixing it with the imported cotton.
• The rate of cotton decreased slightly by Rs 400 to Rs 500 due to the less interest of buyers. The Karachi Cotton Association (KCA) spot rate decreased Rs.300 and touched the level of 9000 per maund.
• Mixed trend was seen in international cotton market. The trade conflict between America and China is lingering on. The fluctuation was seen in New York Cotton due to both positive and negative sides. According to the weekly USDA report till November 7 increase of 110 percent was seen as compared to last week. It is welcoming that China had imported 83300 bales from America in the second week while Pakistan is on the top of the list by importing one lac seventeen thousand bales of American cotton. It is expected that increase of export of American cotton during the week will have a positive impact on the rate also. The rate of cotton remained stable in China while bearish trend was seen in India.
• Big textile groups are signing agreements for the import of cotton in substantial quantity from foreign countries. Up till now they had signed agreements for the import of 30 lac bales and they are signing more agreements. This year production of cotton decreased drastically. Textile mills need one crore 50 lac (15,000,000) bales while it is expected that 90 lac bales will be produced. 60 lac bales will be imported from abroad to fulfill the demands of local textile industry.
• PCGA issued report showing arrival 6,857,518 which is less then 20.92% from the correspondence of last year. Difference is around 1,814,078 from the last year arrival at this time.
• Prices of seed cotton (Kapas/Phutti) in Sindh were in range from Rs 3500 to Rs 4100 per 40 Kgs and cotton is available from Sindh in range from Rs 7800 to Rs 9000 per maund (37.32 Kgs). In Punjab prices of seed cotton was in range from Rs 3600 to Rs 4400 per 40 Kgs and cotton is available from Punjab in range from Rs 8000 to Rs 9100 per maund (37.32 Kgs). In Balochistan, seed cotton prices were in range of Rs 4200-4600.Overall deals were made between the range of USC 61~71 Lbs. (7800~9,000/ 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 64.86 with increase of 56 points.

At last day of the week, MAR 2020 closed at 66.69 with rose of 61 points.

At last day of the week, MAY 2020 closed at 67.87 with upsurge of 51 points.

Liverpool Index:

A was opened at 75.40 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 positive side.
• At last day of the week, LPI “A” closed at 74.90 with decrease of 50 points as of opening figure of the week.

Crude Oil:

Crude Oil prices opened at USD 56.86 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 57.72 with increase of USD 0.86 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 1.11 and British Pound also closed on positive note with figure 1.29 against USD.

Local Yarn:

• Local yarn market went quite after so long time, and activity being much slow as compare to last few weeks. Some sale pressure was notice in market on suppliers and they were interested to make sale on these days. On the other hand, there is liquidity crunch in market due to 17% sale tax amount stuck in GOVT and being multiply every month.
• PSF prices dropped Rs.2/kg by 11^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 in PSF expected in domestic market.
• Faisalabad trading market reported limited business for un-register sector. Exporter and register mills were also slow in their buying. Fine counts demand was there and reasonable activity was reported.

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

Export Yarn:

• Market showed softness and showed normal business activity. Customers kept on checking prices and placed orders as well where they achieved their desired price levels.
• Pakistan cotton prices are dropped due to the lack of buying interest, major reason was the low quality lint. Hence, suppliers showed softness in 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 showed interest in buying and placed some orders for the December shipments.
• 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:

• The local fabric market beat the expectations as market showed soft trend in current week under review to make adjustment against its rising trend for both narrow and wider width fabric markets.
• Buyers floated limited inquiries in the market. Suppliers decreased their asking prices by approx: 1.5%~2% owing to soft yarn prices but limited activity reported in the market.
• Weavers covered their narrow width looms till 3^rd week December~end-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 1.12 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 0.92 to 0.94 per yard based on ex mills.

Export Fabric:

• Far Eastern has shown their interest in fresh buying during the week but their target prices were 3~4% lower hence they suggested to wait for couple of weeks for new buying.
• Prices were firm by start of week however getting soft towards end of the week. Suppliers are expecting that since prices went too much higher so now technical correction is required.
• Currently good suppliers are booked till mid of Dec and offering end Dec onward deliveries whereas average suppliers are offering mid ~20^th Dec onward deliveries.
• It is expected that business activity may improve from next week onward as its been few weeks that customers were aside of buying and now surly they need to purchase their items.

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

20×16/128×60=63”, in range of 1.12 to 1.14 per yd, 16×12/108×56=63” between USD 1.22 to 1.24 per yd and 20×20/108×5863” in range of USD 0.94 to 0.96 per yd based on CNF Far Eastern ports.

• Good activity was observed from Italy, Germany and Portugal as customers are buying good quantities from their selected suppliers. Other part of the Europe remained almost aside of buying.
• USA market remained mixed with limited business activity both in narrow and wider width.
• Wider width suppliers have good sales coverage mainly with domestic buyers hence they are offering Feb onward deliveries.
• Prices for wider width was firm however getting soft about 1~2% towards end of the week due to technical correction in prices.
• Suppliers are expecting good business from European and USA buyers in coming days.

Bedding & Towels:

• Bedding and towels market were slow in last week and not seen any significant change in market. European and other regions customers floated limited Inquiries in Market. Few inquiries were just to check the current price matrix. Limited orders placement seen in market.
• USA Market was also firm, customers were floated inquiries and customer paced limited orders as per their current requirements.
• Dramatically cotton prices started to decrease in the last week due to decrease in cotton prices, yarn prices also decreased and due to this fact home textile articles prices started to decrease. Due to this fact customer is waiting for the further decrease in prices to place the orders.  keeping in view current market situation it looks that prices decrease in future so customer is silent and in Wait and see mood.
• Although Suppliers have orders in hand 70 to 80% of their capacities but still, they are under sales pressure for upcoming months because supplier have available space against their production facilities so to full fill their production capacities 100%, they are trying to get mote orders from different customers / markets.
• 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.

Garments:

• Factories are getting healthy response from export buyers as they have got increased technology in prints and designs over a period of time. This has also increased variety of options to show to customers.
• Pakistan Apparel Industry has observed healthy seasonal loading from different markets of the world. High fashion end stream has got good attraction.
• Factories have already booked their periodic placements. They have space to offer deliveries from end January onwards.

Going Forward:

• In Local Yarn market it is expected that yarn market will be remain slow and stable for next week, and prices will remain same with minor difference where business will be according to count to count and brand to brand in the 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.
• The Export Yarn market remained soft with limited business activity. Customers remained under wait and see mode as they are expecting some corrections on prices.
• In Local Fabric the market will remain firm for coming weeks for both narrow and wider width looms.
• In Export Fabric, the Fareastern markets improved a little however no bulk buying was noticed during the week. European and USA buyers remained mixed with limited business activity however expected to have good demand in coming days.

• In the bedding & towels market it remained slow and business placement from different sectors was slow but keeping in view current market Statics and as per forecast Customer will more buying in coming days if the prices more decrease.

• In Apparel Industry with the advancement in technology Pakistan’s garment industry is ready to cater to the increased demand of customers from around the globe.