PAKISTAN COTTON MARKET
Last week in the local cotton market, cautious business activity was seen by buyers and spinners, most of them are trying to import cotton due to the wide gap in prices comparatively from the local market. Although new crop ginning has been also started and 5000 bales are delivered.
The rate of new crop cotton slightly eases due to the gradual increase in the arrival of new crop, but it seems that prices will not drop in the coming days, and cotton remains firm and upward in the coming days. KCA remained the same at the level of 12300 this week. Karachi Cotton exchange is not issuing their spot rate of the new crop because in Pakistan the new cotton season starts from July 1 so the cotton exchange will issue the spot rate from July 1.
There were different estimates regarding the production of cotton but according to the estimates of the private sector, if the weather conditions remain favorable then 80 to 85 lac bales will be produced in the country. The arrival of Phutti in Punjab is very slow. Factories in the province were taking Phutti from Sindh. The transportation charges of Phutti from Sindh to Punjab are between Rs 100 to Rs 150 per maund. The stock of old cotton is almost over in Sindh but in Punjab ginners still had the stock of 25000 to 30000 bales of old cotton. The ginners are not ready to sell it at a low rate.
The bullish trend remained continued in international cotton markets. The New York Cotton reached 89 cents after increasing. Moreover, an increasing trend was witnessed in the rate of cotton in India. The reason behind the increasing trend in the rate of cotton in India is that the stock of Cotton Cooperating of India has almost finished, now the millers have to buy cotton from ginners. The cotton brokers of India are saying that reason behind increasing prices is that textile mills need cotton so they ate purchasing it at high rates.
According to the monthly WASDE report which was published showed more demand than its production, exports decreased by 40 percent. This time Pakistan is on the top of the list with more than 47000 bales. In the same way closing stock was less as is expected due to which the rate of cotton increased.
Pakistani textile mills imported cotton insufficient amount. It is expected that this year rates will be higher so it is expected that whatever deals Pakistani textile mills will finalize, they will do it thoughtfully. The mills that signed deals for the import of two thousand tons of cotton will decrease their import because of high rates.
The price of (new crop 21-22) cotton in Sindh is between Rs 12,200 to Rs 13,000 per maund. The price of Phutti in Sindh is between Rs 5600 to Rs 6000 per 40 kg. The price of cotton in Punjab (new crop 21-22) is between Rs 12,500 to Rs 13,300 per maund. The price of Phutti in Punjab is between Rs 5700 to 6100 per 40 kgs. The price of Phutti was in the range of USC 95~1.03 Lbs. (12200~13300/ maund).
| Opening Of The Week | Closing Off the Week | Change | |
| Lowest | 98.00 | 98.00 | 0.00 |
| Highest | 104.00 | 103.00 | -1.00 |
CRUDE OIL
Crude Oil prices opened at USD 69.32 with a slightly lower 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 70.91 with an increase of USD 1.68 cents as of the opening figure of the week.
| Opening of Week | Closing Of Week | Change | |
| Price | 69.23 | 70.91 | 1.68 |
EXCHANGE RATE
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 1.21 and British Pound also closed on a negative note with a figure of 1.41 against USD.
| Selling | Buying | |
| LC Sight | 155.58 | 155.53 |
| LC 120 Days | 154.50 | 154.45 |
| Open Market | 157.96 | 154.34 |
NEW YORK COTTON FUTURE
New York Cotton futures opened with lower levels on Monday as compared to the previous week’s closing figures.
NYCF showed an upward trend this week and dropped on closing but still closed on the positive side by the end of the week.
On the last day of the week, JULY 2021 closed at 87.00 with upward of 264 points.
On the last day of the week, OCT 2021 closed at 89.34 with a rose of 308 points.
On the last day of the week, DEC 2021 closed at 87.92 with an increase of 266 points.
LIVER POOL INDICES
Liverpool Index A was opened at 92.20 with the higher level of the previous week’s closing figure.
In this week’s Index, “A” marched upward and closed on the positive side by the end of the week.
On the last day of the week, LPI “A” closed at 95.55 with an increase of 335 points.
| Opening of the Week | Closing of the Week | Change | |
| Index A | 92.20 | 95.55 | 3.35 |
| Index B | 0.00 | 0.00 | 0.00 |
PAKISTAN YARN MARKET
The local yarn market jumped up during this week, followed by NYCF, and good inquiries were floated in the market. Mills were comfortable in all counts sale position and they increased rate gradually according to their sale coverage. On the other hand, buyers were buying yarn as per their buying position.
PSF prices were Increased by Rs.2/kg by IFL in the domestic market dated 7th June 2021. PTA, MEG prices increased in the international market and crude oil prices remained stable. For next week, prices are expected to increase further Rs.2~3/kg.
Faisalabad trading market was quiet before a week of budget. All traders were waiting for the new Govt policy to work accordingly. Business activity is expected to start from next week.
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 | 2236 – 2353 | 575 – 605 |
| 20/1 CD | 2373 – 2489 | 610 – 640 |
| 30/1 CD | 2820 – 2878 | 725 – 740 |
| 20/1 CM | 2800 – 2898 | 720 – 745 |
| 30/1 PC 52:48 | 2081 – 2275 | 535 – 585 |
| 40/1 CM | 3617 – 3714 | 930 – 955 |
| 60/1 CM | 4765 – 4979 | 1225 – 1280 |
| 80/1 CM | 6048 – 6204 | 1555 – 1595 |
EXPORT YARN MARKET
Limited inquiries were seen in export yarn with limited business. Most of them are on cautious buying.
Suppliers didn’t reduce prices and were not in hurry to sell yarn due to the handsome order booking in hand.
Local Pakistan market behaving well, which put the market firm condition.
Prices of cotton remained firm on higher levels and it’s expected that cotton prices will not drop due to that reason buyers are feeling comfortable and not agree to reduce yarn prices. Overall buyers are digesting the prices due to the increase in prices worldwide, so they are placing their orders from time to time as per demand.
It is expected that yarn prices may rose further if the demand persists and the cotton price remains upward internationally. Chinese customers were remained in the market and booked yarn but on cautious levels. Hence, suppliers are not showing any flexibility and under firm and stable sentiment due to which Chinese buyers may active to buy in coming days.
European customers were checking prices and we might see another phase of buying for the July onwards delivery.
| Count | USD / Bale |
| 16/1 CD | 600 – 610 |
| 20/1 CD | 610 – 620 |
| 20/1 CM | 650 – 660 |
| 16/1 CM | 640 – 650 |
| 20/2 CD | 625 – 635 |
| 24/2 CD | 655 – 665 |
| 10/1 CD SIRO YARN FOR WEAVING | 515 – 525 |
PAKISTAN FABRIC MARKET
The local fabric week opened with an upward trend and the week closed with the same sentiments for both narrow and wider width fabrics.
The flow of inquiries improved drastically as local finishers showed interested in buying but as they are not getting their required deliveries so they are still struggling to get their deliveries to place the orders. Buyers are ready to book orders at the current level with little negotiation as they are expecting a further rise in fabric prices. In the current week, buyers booked orders after tough negotiations at an increased price level as compared to last week’s level.
Currently, major weavers are booked till the end of July / early August in narrow width and wider looms are booked till mid-August ~ end August and offering onward deliveries.
Local fabric prices of regular items are as follows:
| Construction | Price US$/YD Ex Mill |
| 20CDX16CD/128X60 – 63″ 3/1 ”S” TWILL PAK CTN | 1.51 – 1.53 |
| 16X12/108X56 63″ 3/1 | 1.62 – 1.64 |
| 20CDX20CD/108X58 63″ 3/1 ”S” TWILL PAK CTN | 1.21 – 1.23 |
EXPORT FABRIC MARKET
This week shows the handsome business activity as many customers from China, Bangladesh and Korea have booked bulk quantities for the next 2~3 months. Asking prices started increasing by early of the week and rise about 3~4% towards the end of the week due to a hike in yarn prices. Customers have booked the quantities with 2% less than the asking prices.
Suppliers have good booking situation hence they are in a very comfortable zone. Almost all suppliers are booked till the end of July and offering mid ~ end-Aug deliveries nowadays. It is expected that export fabric business activity will further increase in days to come and prices will remain firm with an upward trend.
The flow of inquiries further increase from European markets but customers are resisting existing prices. Limited orders were finalized by Spain, Italian customers. Other markets like Germany, France, and Portugal remained slow during the week as less business activity was reported from these regions.
Wider width suppliers have also good booking in hand thus they are offering end Aug / Sep deliveries
Workwear items demand further increased by the European customers however most of the suppliers could not offer the prices towards the end of the week because the spinning units held their offers anticipating that polyester prices will further increase by next week. USA market was active as customers have floated a good number of inquiries during the week resultant decent booking done.
| Construction | Price US$/YD CNF Far East |
| 20CDX16CD/128X60 – 63″ 3/1 ”S” TWILL PAK CTN | 1.50 – 1.52 |
| 16X12/108X56 63″ 3/1 | 1.60 – 1.62 |
| 20CDX20CD/108X58 63″ 3/1 ”S” TWILL PAK CTN | 1.20 – 1.22 |
BED LINEN & TOWELS
According to the National Retail Federation of USA, a growth of 13.5% is expected in retail sales in the coming month’s thanks to the opening of the USA market. Let alone this will contribute towards heavy placements in Pakistan of Bedding and Towel products, but the materialization of such an event will only take place if the prices stay competitive from the neighboring exporters where it is anticipated that the opening of India will impact order placements to Pakistan.
Such competition can be tackled if the raw material prices stay at logical levels, supply is a major contributor where we are seeing a shortage of local cotton and ample of orders placed with polyester suppliers (Monopolistic behavior due to few manufacturers of polyester fiber), imported cotton prices being driven up. All these will prove the exports to be a failure if stern action isn’t taken care of.
Lead time has stretched from 90 to 120 days for a new order.
GARMENTS
Pakistani garment factories are booked with a reasonable amount of orders. The price points remained firm as the raw material cost is high. Domestic cotton production and arrival are expected quite on a lower side i.e around 5.5 million bales compared with overall demand to fulfill the industry’s requirement. This factor might not support yarn prices come down. At the same time, Pakistani factories are at an advantage with their exports increasing as customers do not have too many options to source from under the current global political and Covid-19 circumstance.
In terms of what consumers are buying this back-to-school season in the US, apparel is expected to be increased by 78.2% last year and by 11.3% in 2019, while sales at department stores are anticipated to be hiked by 25.3% year-on-year and by 9.5% on 2019. This factor will add to the sourcing apparel from Pakistan. Currently, lead time is being offered from ninety to a hundred days for the new inquiries.
GOING FORWARD
About the future market, it is expected that local yarn prices will remain firm and prices will be dependent on raw cotton, after 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 local cotton prices will remain firm in a day to come due to the shortage of the crop size, hence international cotton is also on the firm and upward side. Due to which the import of cotton will increase further.
Going forward we expect that the local fabric market still has the capacity to move upward as short crop news is emerging from market pundits.
The export yarn has fewer orders during the week as customers are cautious buying. Suppliers are not reducing prices due to upward sentiment. Prices may further rise in the coming days due to good demand as well upward trend in the international market.
It is expected that export fabric business activity will further increase in days to come and prices will remain firm with an upward trend because of good demand from Far Eastern, European, and USA markets. With the increased demand and limited sourcing options from the buyers’ side, the Pakistan apparel industry is likely to get more orders in the future.
The bedding & Towels market has to settle for competitiveness by pressurizing the raw material suppliers to bring down their prices, otherwise, the coming days will be a missed opportunity for the upcoming season.
