PAKISTAN COTTON MARKET
Last week in the local cotton market, thin business activity was seen aimed arrival of new crop cotton, buyer and spinners are waiting for the new crop arrival. Keeping in mind the high rates in the local cotton market big groups of textiles are increasing their imports gradually.
The rate of new crop cotton increased and buyers are expecting that this season prices will increase, therefore some advance bookings are also observed. KCA remained the same at the level of 12300 this week.
Moreover, a ginning factory of Burewala sold 200 bales of cotton at Rs 14000 per maund which is the highest rate in 11 years. The rate of Phutti after increasing reached between Rs 5800 to Rs 6300 per 40 Kg. Up till now, 2000 bales of new cotton were delivered in Sindh. Moreover, deals of 1000 to 1200 bales were finalized.
Many big textile groups are signing agreements for the import of cotton due to the high rates in the local cotton market. According to the private importer’s deals were finalized for the import of two lac fifty thousand bales of cotton from abroad for the new season. It is expected that the import of cotton will be increased due to the high rates of cotton in the local cotton market. The difference between the rate of local and imported cotton is Rs 3000 per maund due to which big groups were signing agreements for the import of cotton from abroad. However, small mills don’t have any stock of cotton so they were buying cotton from the local market at existing rates. That’s why it looks like the rate of cotton will not drop in the near future.
The area under cotton cultivation last year was 3.821 million acres and it is decreasing continuously for the last three years. This year, it is estimated that the area under cotton sowing will remain 3.31 million acres, showing a decline of 13.4 percent as compared to last year. However, the shortfall is more if it is calculated against the assigned target.
Up till now, cotton will be cultivated on 17 lac acres in Sindh. In Punjab according to estimates cotton will be cultivated on 40 lac acres. The cotton sowing has been completed on 28 to 30 lac acres in Punjab. In Sindh, cotton sowing has been completed on 13 to 14 lac acres. The acreage is increasing day by day. The target of production of one crore five lac (10.5mn) bales has been set for next season.
According to the weekly export report of USDA, exports witnessed an increase of 6 percent. Pakistan is on the top with the import agreements of more than 72,000 bales and India is on number 2 with the import of more than 4200 bales. The new crop of cotton has started arriving in Brazil. The rate of cotton is stable in Brazil. There is some time in the arrival of cotton crop in Central Asia, Sudan, and Argentina. The rate of cotton is stable there. A sharp increase was observed in the rate of cotton in India and an increase of Rs 1000 per candy was witnessed.
The price of (new crop 21-22) cotton in Sindh is between Rs 12,000 to Rs 12,700 per maund. The price of Phutti in Sindh is between Rs 5700 to Rs 6100 per 40 kg. The price of cotton in Punjab (new crop 21-22) is between Rs 12,200 to Rs 13,100 per maund. The price of Phutti in Punjab is between Rs 5900 to 6200 per 40 kgs. The price of Phutti in Overall prices of cotton was in the range of USC 95~1.02 Lbs. (12200~13100/ maund).
|Opening Of the Week||Closing Of the Week||Change|
Crude Oil prices opened at USD 67.72 with a higher level as compared to last week’s closing figures.
In this week, crude oil prices showed a rising trend and closed on the positive side at the end of the week.
On the last day of the week, the Crude Oil prices closed at USD 69.62 with an increase of USD 1.9 cents as of the opening figure of the week.
|Opening of Week||Closing Of Week||Change|
In last week values of the Pak rupee depreciated against the US Dollar’s, other major currencies showed mixed trends in both Interbank and open markets.
At the end of the week, Euro closed on a negative note with a figure of 1.22 and British Pound also closed on a negative note with a figure of 1.41 against USD.
|LC 120 Days||153.97||153.92|
NEW YORK COTTON FUTURE
New York Cotton futures opened with higher levels on Monday as compared to the previous week’s closing figures.
NYCF dropped in the next session and later showed an upward trend till closing, hence closed on the positive side by the end of the week.
On the last day of the week, JULY 2021 closed at 85.80 with upward of 155 points.
On the last day of the week, OCT 2021 closed at 85.93 with a rose of 57 points.
On the last day of the week, DEC 2021 closed at 85.88 with an increase of 107 points.
LIVER POOL INDICES
Liverpool Index A was opened at 89.10 with the same level as the previous week’s closing figure.
In this week’s Index, “A” marched upward and dropped on closing only, however, closed on the positive side by the end of the week.
On the last day of the week, LPI “A” closed at 91.70 with a decrease of 260 points.
|Opening of the Week||Closing of the Week||Change|
PAKISTAN YARN MARKET
Local yarn market remained firm in asking prices and some better rate sale was made during last week ended. New crop forward cotton sale reported the highest level and everyone is expecting peak rates of cotton which will force mill for firm rates. Most mills have a strategy to make the forward sales of 4~6 weeks max and don’t oversell yarn on these levels. Buyers were busy in their routine count’s buying.
PSF prices remained stable during last week ended in the domestic market. PTA, MEG prices increased in the international market and crude oil prices remained stable. For next week, prices are expected to increase by Rs.2~3/kg.
Faisalabad trading market was active and traders were busy buying viscose yarn and PC/PV yarn. Prices increased as compare to last week. Cotton yarn fine counts demand was re-started and good trade was made during last week ended.
Followings are current asking prices of yarn in local market based on ex mills:
|Count||Price in Pak Rupees / 10 LBS||Price US$/Bale|
|16/1 CD||2204 – 2301||570 – 595|
|20/1 CD||2301 – 2436||595 – 630|
|30/1 CD||2765 – 2842||715 – 735|
|20/1 CM||2746 – 2823||710 – 730|
|30/1 PC 52:48||2030 – 2185||525 – 565|
|40/1 CM||3596 – 3674||930 – 950|
|60/1 CM||4698 – 4950||1215 – 1280|
|80/1 CM||5994 – 6129||1550 – 1585|
EXPORT YARN MARKET
The export yarn market remained under limited business activity. Suppliers remained firm and stable due to their comfortable sales position as they have sold handsome quantities in past.
There has been good demand for yarn in domestic and international markets for the last couple of months. So, this gave stability to suppliers and they are not in any panic for sales.
Cotton prices in Pakistan for the new season 2021-2022 have shown a handsome increase and new crop deals were confirmed with an increase of almost 8% in a single week.
A major reason for such a hike in prices was another year with the short crop as it is estimated that crop size will remain on the lower side. Generally speaking, customers from different regions have also increased their price levels and placed orders as well.
As we are moving towards the revival of the market as COVID is getting under control. So, the order situation with all the suppliers is handsome and they are able to sell their productions easily even at better prices.
So, it is expected that yarn prices will remain firm and stable in days to come with a tendency to increase further.
Chinese customers are in the market and trying to book limited quantities due to firm and stable prices. However, suppliers are not showing any flexibility and under firm and stable sentiment so we might see good activity in days to come.
European customers have also floated handsome numbers of inquiries and we might see another phase of buying for the July onwards delivery.
|Count||USD / Bale|
|16/1 CD||590 – 600|
|20/1 CD||600 – 610|
|20/1 CM||640 – 650|
|16/1 CM||630 – 640|
|20/2 CD||615 – 625|
|24/2 CD||645 – 655|
|10/1 CD SIRO YARN FOR WEAVING||515 – 525|
PAKISTAN FABRIC MARKET
The local fabric market started with a steady and firm tone but after mid-week buyers floated bulk inquiries and also booked bulk orders anticipating that fabric prices may move up in coming weeks for both narrow and wider width
Weavers received inquiries with improved numbers and also booked orders after tough negotiations at last week’s price level. Local finishers came out from their wait-and-see mode as local cotton news is not very promising and market pundits are expecting that there’s no chance of easing down fabric prices.
Major weavers are now booked till 3rd week July ~ end July’21 in narrow and also covered their width till mid-August’21 and offering onward deliveries respectively. Weavers are still facing slight resistance in getting poly/cotton yarn offers from their spinners due to the rising trend of polyester fiber.
Local fabric prices of regular items are as follows:
|Construction||Price US$/YD Ex Mill|
|20CDX16CD/128X60 – 63″ 3/1 ”S” TWILL PAK CTN||1.49 – 1.51|
|16X12/108X56 63″ 3/1||1.60 – 1.62|
|20CDX20CD/108X58 63″ 3/1 ”S” TWILL PAK CTN||1.19 – 1.21|
EXPORT FABRIC MARKET
Far Eastern customers are floating their inquiries mainly for price checking. Their target prices are 5~6% lower than the offered prices which are not possible to achieve. Asking prices are firm nowadays due to the increase in raw material prices. Another reason for firmness in prices is that suppliers have good sales coverage for the next 60 days.
A good flow of inquiries was received from Bangladesh resultant good booking during the week. Other markets like Japan, China, Vietnam, Sri Lanka remained mixed with limited inquiries but no considerable buying was witnessed.
Currently, suppliers are booked till the end of July and offering mid-Aug onward deliveries.
A good flow of inquiries was reported from European customers however only limited buying was witnessed for urgent need. Their target prices are 4~5% less than the offered prices in wider width which suppliers did not accept due to firmness in raw material prices and good sales coverage.
USA market was active in terms of inquiries and expected to confirm orders in days to come.
Wider width suppliers are booked till the end of July ~ mid-Aug and offering end Aug onward deliveries.
Following were the closing rates based on CNF Far Eastern markets:
|Construction||Price US$/YD CNF Far East|
|20CDX16CD/128X60 – 63″ 3/1 ”S” TWILL PAK CTN||1.49 – 1.51|
|16X12/108X56 63″ 3/1||1.59 – 1.61|
|20CDX20CD/108X58 63″ 3/1 ”S” TWILL PAK CTN||1.19 – 1.21|
BED LINEN & TOWELS
Manufacturers of bedding and towel articles in Pakistan are hoping for lower price levels for raw material procurement in the upcoming cotton harvest. The current prices are already noncompetitive and because of the neighboring markets disturbed due to COVID-19 lockdowns, the Pakistani supplier is at an advantage with their exports increasing due to the buyer having not many options to source from.
In a new development, many Faisalabad-based manufacturers are planning to move their factories to FIEDMC, a new zone under the CPEC, this will give them taxation benefits and other facilities of uninterrupted utilities. This will make them more competitive on the international stage and will enable them to offer better services with quality output.
Deliveries are stretching from 90 to 120 days and for a repeat from 45 to 60 days.
Garment manufacturers have kept the prices firm mainly due to increased raw material costs. Secondly, the overall international scenario with China and India helped Pakistani factories grab orders from customers of the US and EU which have filled the factories’ production space till Sep overall. So far garment manufacturers have performed quite well in delivering developments for the SS22 season and bulk orders are in pipeline for the season.
Growth in exports of value-added sectors contributed to an increase in overall exports from the sectors. One of the reasons for growth in these sectors is due to the low base of last year when export-oriented industries remained closed due to the Covid-19 lockdown and cancellation of orders from international buyers.
Exports of apparel in 11MFY21 have observed a 16pc increase in men’s garments to $3.505bn against $3.019bn last year. An increase of 33pc in women garments to $646.49m was noted against $486.52m over the corresponding months of last year.
About the future market, it is expected that local yarn prices will remain firm and prices will be dependent on bulk cotton arrival of this season which will determine the yarn price accordingly. Further yarn price trends will be according to the demand and supply of different yarn counts which will lead to the price level.
It is expected that the import of cotton will be increased due to the high rates of cotton in the local cotton market. The difference between the rate of local and imported cotton is Rs 2000~3000 per maund due to which big groups were signing agreements for the import of cotton from abroad. However, small mills don’t have any stock of cotton so they were buying cotton from the local market. That’s why it looks like the rate of cotton will not drop in the near future.
For the Local fabric, healthy business activity was seen during the week as customers were expecting an increase in prices in days to come. We expect the market to remain firm with good sales activity and we are not foreseeing any sharp downward trend.
Export yarn market showed good activity as customers and suppliers remained busy in discussions. Orders were also reported in different regions and prices are under a firm and stable tone.
Export fabric is expected that prices will firm and the flow of inquiry may remain limited due to slow demand. European customers are active however they are also showing resistance in offered prices hence buying limited quantities for urgent need only.
A healthy wave is ahead for the apparel industry of Pakistan as factories have performed well and are geared up to meet customer’s required standards. Secondly, the overall international scenario with China and India helped Pakistani factories grab orders from customers of the US and EU.
New crop harvest opening price will set the course for price competitiveness for Bedding and Towel Manufacturers for the coming seasonal and replenishments order exports