Market Report – Pakistan 18 May 2020

PAKISTAN COTTON MARKET:

In the local cotton market during last week, business activities remain suspended, although easy lockdown has been started but no interest was seen by the buyers. From the last two months mills were remained closed due to which they had the stock of cotton that’s why limited buying will be witnessed in the market. On the other hand ginners had the stock of 5 lac bales and they were looking for the buyers. They also had to pay the interest while the cotton is losing weight due to the sunshine.

As there was no business, The KCA spot rate was same at Rs 8600 per maund, without any changes.
The sowing has completed in the lower areas of Sindh and now the sowing has started in the upper areas of Sindh as well as in Punjab. The farmers were complaining regarding the low germination value of seeds. On the other hand, farmers are in panic. Contradictory opinions on cotton support price and increasing threat of attack of Locusts.

The germination level of seed is 30 percent to 50 percent. Farmers were not satisfied because they were not getting desired results despite using double quantity of seeds.

On the other hand, the delivery of imported cotton is continued. Mixed trend was seen in international cotton market. The rate of New York Cotton remained firm because of buying by China. According to the USDA weekly report exports were decreased by 35 percent as compared to last week. However, China remains number one importer. The rate of cotton remained stable in China. In India the rate of cotton increased to some extent but again bearish trend was seen during the week under review.

Prices of cotton is available from Sindh in range from Rs 7800 to Rs 8500 per maund (37.32 Kgs). In Punjab prices in range from Rs 8000 to Rs 8600 per maund (37.32 Kgs). Overall prices were in the range of USC 60~66 Lbs. (7800~8,600/ maund).

Opening Of the Week Closing Of the Week Change
Lowest 61.00 61.00 0.00
Highest 65.00 65.00 0.00

CRUDE OIL:

Crude Oil prices opened at USD 24.14 with lower level as compared to last week closing figures.
In this week, crude oil price showed mix trend and closed on positive side at the end of week.

In last day of the week, Crude Oil price closed at USD 29.43 with increase of USD 5.29 cents as of opening figure of week.

Lowest Highest Change
Price 24.14 29.43 -5.29

EXCHANGE RATE:

In last week values of Pak rupee depreciated 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 1.08 and British Pound also closed on negative note with figure 1.21 against USD.

Selling Buying
LC Sight 160.00 159.95
LC 120 Days 157.95 157.90
Open Market 162.31 158.60

NEW YORK COTTON FUTURE:

New York Cotton futures opened on higher levels on Monday as compare to previous week’s closing figures.
NYCF showed upward trend , only dropped in one session by mid of week and hence closed on positive side by the end of week.

At last day of the week, JULY 2020 closed at 58.25 with rose of 162 points.
At last day of the week, OCT 2020 closed at 57.95 with surge up of 33 point.
At last day of the week, DEC 2020 closed at 58.17 with increase of 54 point.

PAKISTAN YARN MARKET:

Local yarn market remained under sale pressure and most of mills were interested to get maximum sale after all units re-started production. Prices were already dropped and still they were interested to work against bid/qty and payment term. On the other hand, weavers were getting yarn for ready delivery before Eid holidays and some business was floated in market.

PSF prices remained stable in domestic market during this week. PTA, MEG prices were decreased after decline of oil prices in international market and same followed by International polyester fiber.

Faisalabad trading market started working and some business resumed and traders are interested to reduce their stocks.

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

Count Price US$/Bale
16/1 CD 380 – 390
20/1 CD 390 – 410
30/1 CD 460 – 475
20/1 CM 470 – 480
30/1 PC 52:48 380 – 390
40/1 CM 575 – 590
60/1 CM 835 – 875
80/1 CM 1120 – 1220

EXPORT YARN MARKET:

Export yarn market remained under lackluster business activity. Customers are on silent mode and only managing old offers.
Situation is not good as suppliers are facing serious issue of stocks.

As Eid Holidays are coming and all suppliers are under severe pressure of stocks. So, they want to dispose off maximum inventory before EID holidays to avoid any losses.

We might see market to be moving in same direction with minor fluctuations. Chinese customers kept on buying limited quantities of siro yarns but lifting is quite slow. Hence, in coming days, we might see some dispatches from suppliers which might reduce their pressure
European customer are getting slight better as customers are floating enquiries and some business has been recovered.

Count Korea HongKong Taiwan Japan
16/1 CD 375 – 385 375 – 385 375 – 385 375 – 385
20/1 CD 385 – 390 385 – 390 385 – 390 385 – 390
20/1 CM 455 – 460 455 – 460 455 – 460 455 – 460
30/1 CD
32/1 CD HOS UNWAXED 100% COT.
30/1 CM 480 – 485 480 – 485 480 – 485 480 – 485
32/1 CM 490 – 495 490 – 495 490 – 495 490 – 495
24/2 CD 445 – 455 445 – 455 445 – 455

PAKISTAN FABRIC MARKET:

In current week under review the local fabric market remained slow and stagnant with prices showed soft trend for both narrow and wider width fabrics.

Buyers floated negligible inquiries and weavers are chasing for confirm orders to continue their looms. Weavers are ready to negotiate their offered prices to some extent. current market sentiments has damaged all weavers and they have huge stocks to carry as their buyers are not lifting produced fabrics.

Weavers are booked in narrow width loom till mid June’2020 and also covered their wider width looms till end June’2020. Weavers are still chasing their local buyers for confirm inquiries in order to keep their looms running.

Local fabric prices of regular items are as follows:

Construction Price US$/YD ExMill
20CDX16CD/128X60 –  63″  3/1 ”S” TWILL PAK CTN 0.95 – 0.97
16X12/108X56 63″  3/1 1.07 – 1.09
20CDX20CD/108X58 63″  3/1 ”S” TWILL PAK CTN 0.79 – 0.81

EXPORT FABRIC MARKET:

Improved business activity was witnessed from Far Eastern sectors. Customers have taken interest and booked good quantities at 4~5% lower price than last orders. The customers were active from Korea, Japan and some of the inquiries from China resultant decent quantity booking during the week.

Prices were softened about 2~3% however the business was conducted at 5~6% from the last orders.

Suppliers are still keeping ready stocks as most of the customers are not lifting the goods due to COVID-19 situation. Although most of the countries have started their operation and softened the lockdown but business activity may take some time to get normal. The suppliers are now facing serious problem to keep the ready goods as well as new production due to space limitations in their godowns.

Good suppliers are booked till end of June and offering early July onward deliveries whereas average suppliers are booked till mid of June and offering end June onward deliveries. Some of the weavers are in a position to start the production immediately.

There was improved business activity observed from European countries as customers are now sharing their requirements.
Average activity was noticed from Germany, Portugal, Italy and Spain. Some of the customers will resume their work from early June so the business may pick up further.

Wider width business also remained mixed with limited activity, Prices were soften due to less demand although the cotton prices are same but yarn prices were reduced due to demand and supply formula Wider width suppliers are booked till mid of July and offering end July onward deliveries.
Limited inquiry was received from USA but no considerable business was witnessed.

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

Construction Price US$/YD CNF Far East
20CDX16CD/128X60 –  63″  3/1 ”S” TWILL PAK CTN 0.98 – 1.00
16X12/108X56 63″  3/1 1.08 – 1.10
20CDX20CD/108X58 63″  3/1 ”S” TWILL PAK CTN 0.84 – 0.86

BED LINEN & TOWELS:

The bedding industry is recovering from losses meanwhile is experiencing an increase in the number of inquiries placed during the previous week. Order confirmations are still in doubt because of the decreasing demands world over from major retailers. The towel suppliers are left in a limbo, as to the completely shut hotel industry.

The manufacturers many of whom are focusing towards producing face masks where possible.

Prices for bedding and towel articles are pretty favorable with a reduction of 8 to 10% due to falling raw material prices. Right time to buy indeed. Deliveries are available of in-stock/leftover fabrics to 45 top 50 days of roughly about 7000 sets. From weave to finished article its taking around 80 to 90 days.

GARMENTS:

Garment exporters are reportedly resuming production and have got government’s approval to continue operations under strict observance of SOPs. With these developments, exports are likely to revive gradually. On the other side almost half of Pakistan’s exports are directed to the countries most affected by the coronavirus — China, UK, US, France, Italy, Spain and Germany. The affected western countries constitute the most important destination for finished products belonging to the textile. With apparels mostly destined for the affected western countries, their growth rates can be dampened if demand continues to fall.

It was only in February when the textile and clothing exports jumped nearly 17pc on a year-on-year basis. This growth was reported a long time as the past few years had been disfigured by single-digit increases. Details showed exports of ready-made garments dipped by 2.43pc in value and drifted much lower in quantity by 34.83pc during March while those of knitwear dipped 2.63pc in value but posted 7.14pc growth in quantity. Pakistani exporters are keen to develop strategies to mitigate the adverse impact from the crisis by targeting a range of products that may reveal potential but are within the range of their own core competencies. For instance, textile exporters successfully shifting towards production of personal protection equipment and face masks may report a spike in their export activity.

GOING FORWARD:

It is expected that domestic yarn market will be remained under sale pressure for next few weeks.

Slow market sentiment was witnessed in local fabric market. Prices were soft. Suppliers are keeping stocks for dyeing units. Slow business is expected in coming days as well.

Export yarn market is still in trouble and moving with slight betterment in activity. However, still suppliers are waiting for demand to come so that they can dispatch their ready stocks.

Improved business activity was observed for export fabric from Far Eastern and European markets which is good sign. The prices were soft due to less demand. It is expected that business activity will improve from early June when many customers will resume their work.

Pakistan apparel industry is facing many challenges including demand shrinkage. Exporters must diversify to other products to reduce the risk of losses.

Garment buying has picked up but is yet to reach the optimal levels. Coming weeks will define whether the market is still lucrative or not.

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