Market Report – Pakistan 25 Nov 2019

Local Cotton Highlights:

• During last week, in the local cotton market, moderate buying interest has been witnessed, most of the buyers kept away from the market due to the financial crunch. Large textile groups were involved in the import agreements of cotton. Importers had signed agreements for the import of 32 lac bales of cotton while more agreements were in the pipe line. Spinners this year will import 60 lac bales of worth 1.75 billion US dollars. Whereas ginners were in panic to sell their low-quality lint to avoid further loss.
• Meanwhile the rate of cotton is to remained stable and did not show any major change thanks to the moderate buying. The Karachi Cotton Association (KCA) spot rate was firm at the level of 9000 per maund.
• Bearish trend was seen in international cotton market. Due to the news of production of cotton in American and in the weekly export report of USDA where exports have decreased by 34% as compared to last week and further due to the settlement of America and China trade conflict, a downward trend has been seen.
• Last week China had signed agreements with America for the import of thousands of bales which gave the impression that there is some progress regarding American and China Trade conflict which is still pending to be resolved.
• 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 4300 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 4200-4500.Overall deals were made between the range of USC 61~71 Lbs. (7800~9,250/ maund).

New York Cotton Futures:

• New York Cotton futures opened on lower levels on Monday as compared to previous week’s closing figures.
• NYCF showed downward trend in this week, while recovered on closing but still closing was on a negative side.

At last day of the week, DEC 2019 closed at 63.42 with decrease of 79 points.

At last day of the week, MAR 2020 closed at 64.85 with decline of 112 points.

At last day of the week, MAY 2020 closed at 65.94 with drop of 130 points.

Liverpool Index:

A was opened at 74.90 with same level from previous week’s closing figure.

• In this week Index “A” rose in next session and later showed negative trend till closing, at last closed on negative side.
• At last day of the week, LPI “A” closed at 73.40 with decrease of 150 points as of opening figure of the week.

Crude Oil:

Crude Oil prices opened at USD 57.05 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 57.77 with increase of USD 0.72 cents as of opening figure of week.

Pakistan Currency Exchange Rates

• In last week values of Pak rupee remained stable 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 quiet for another week in a row, and activity remained slow as compared to last few weeks. Some sale pressure was notice in the market on suppliers especially in coarse count and they were interested to make sales during the days. On the other hand, there is liquidity crunch in the market due to sale tax amount withheld by GOVT and which is being multiplied every month. Weavers were away from buying.
• PSF prices dropped Rs.2/kg by 18^th November 2019. In China PSF prices dropped and internationally crude oil prices also were in the 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 average business activity for un-register sector. Exporter and register mills were also slow in their buying. Fine counts demand was there and reasonable activity was reported. Blended yarn demand reported very slow.

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

Export Yarn:

• Market remained slow with a slightly softer tone. Customers remained on side lines with limited order confirmations. It has been witnessed that activity in cotton market has been slowed down after decline in the US cotton prices. This has put an impact on the price of yarn worldwide. We might see further correction in prices in the days to come as demand from customer is dropping. However, some orders were confirmed where customer got their required price and deliveries.
• 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 remained in the market and kept on booking limited orders. Customer were targeting supplier having sales pressure to catch attractive prices. Somehow, they succeeded in it as well and got some attractive deals.
• European customers floated good numbers of enquiries. However, order confirmations were slow due to gap in asking and bidding prices. At the same time, 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 extended the decline due to soft yarn prices for both narrow and wider width fabrics markets.
• Though flow of inquiries slightly increased in current week under review but orders confirmed in limited numbers and weavers extended their current booking level for another 2-3 weeks.
• Major weavers are booked in narrow width for End December ~ early January’2020 and wider width normal looms are booked till end January’2020 and offering onward deliveries. Whereas special looms are booked till Mid Feb ~ End February and available deliveries are March/April’2020.

Local fabric prices of regular items are as follows:

20×16/128×60=63”at USD 1.09 to 1.11 per yard, 16×12/108×56=63” in range of USD 1.18 to 1.20 per yard and 20×20/108×58=63” was sold in range of USD 0.91 to 0.93 per yard based on ex mills.

Export Fabric:

• Far Eastern markets are not picking up due to slow buying trend from their end customers. Korean customers are still holding ready major stocks with their suppliers and lifting less quantities only as per their urgent needs.
• Chinese customers have sent limited inquiries resultant limited business during the week. Average business activity was observed from Bangladesh and Japan. Sri Lanka, Thailand and Indonesian customers remained aside of buying.
• Asking prices were soft by 1~2% due to less demand and soft in raw material prices. Good suppliers are booked till end of Dec and offering mid Jan onward deliveries whereas average suppliers are offering end Dec onward deliveries. Suppliers are expecting average business activity in days to come and prices may remain stable with soft trend.

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.

• Business activity from Germany, Italy and Portugal remained good with decent booking with their selected suppliers. Average business was observed from Spain, France and Belgium. Prices for wider width was stable with soft trend due to technical correction in raw material. Wider width suppliers have good demand from European as well as domestic brands hence they are comfortable booked till Jan and offering Feb onward deliveries.
• Average business was witnessed from USA market both for narrow and wider width. According to the market trend, it is expected that business activity will further improve from Europe and USA.

Bedding & Towels:

• Market activity remained slow in the last week and business activities are observed as being nominal. European and other regional customers floated limited inquiries in the market, USA Market was also slow, customers were floated few inquiries and placement of orders were also limited.
• Cotton prices further decreased during last week and impact of this price correction has started to reflect through yarn prices. So due to the improvement in prices bedding & towel articles have also started moving downwards with the same ratio.
• 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:

• Pakistan has felt positive vibes in Apparel Industry during the past and is observing consistent business loading from the customers around the globe.
• A strong source base for fleece and heavy weight fabric garments have been one of the major reasons for buyers to come to Pakistan. Better compliances and sustainable product and production options in factories have been an added feature. Many of the factories have started their expansion programs as they are forecasting better volumes in future.
• Along with latest embellishment techniques, price points have been one for the main interest of the buyers. Factories have space to offer deliveries from February onward.

Going Forward:

• In Local Yarn Market, it is expected that yarn market will be remain slow and soft for next week due to soft prices of raw materials, and price will be remains same with minor difference and business will be according count to count and brand to brand in market. Further price trends will be according to demand and supply of different counts which will lead price level.
• In Export Yarn the market remained under pressure as prices of yarn has shown softness after slash in cotton prices. Limited business was matured only where customer achieved their target price and deliveries.
• Local fabric market may show slight volatility but mainly steady trend is expected for coming weeks for both narrow and wider width looms.
• In Export Fabric, the Fareastern markets are still slow and dull. Europe and USA markets remained mixed as some part of the Europe is responding well. Prices are stable with soft trend and expected to remain soft in days to come.
• In Bedding & Towels market overall business activities were slow and business placement from different sectors remained slow as well, but keeping in view current market statics and as per the forecast, customer will buy more in the coming weeks if prices remain at their current levels or drop further.
• Garment sector going through reasonable business developments which are attracting buyers to come in Pakistan and place orders.