Market Report- Pakistan 3 April 2023

Pakistan Cotton Market:


During the last week, activity remained dull, buyers were still away from buying. There was a slump in the international cotton market.

The ongoing crisis in the textile sector is getting worse. In the domestic cotton market, there was almost no buying by the ginners during the past week.

Despite panic selling by the ginners, there was hardly any trading activity, and if there was any activity it was on a credit basis.

That’s why there is uncertainty in the market that will remain slow during the whole month of Ramzan.
With every passing day, the crisis in the textile sector is getting worse.

Local cotton prices remained soft due to the silence in the market and buyers were not interested in buying.

The rate of cotton was Rs 17,000 to Rs 20,000 per maund. The price of Phutti is between Rs 7,000 and 9,000 per 40 kg. KCA was the same at the level of rs 18,700 per maund.

PSF increased by rs.3 and is available at the level of  358  pkr/kgs.

Cotton Sub-committee of the Punjab Seed Committee has proposed approval of Hi-Tech GMO & Hybrid Cotton seed varieties on a fast-track system by avoiding complicated rules and procedures to achieve a better yield of this cash crop. As resultantly a 3-time decrease in the yield of the Cotton crop has badly affected National Economy.

Demand concerns have prompted about a 6% decline in US cotton futures this year, and prices hit a 20-week low this week amid the ongoing banking sector crisis.

The USDA lowered its 2022/23 world cotton consumption estimates to 110.11 million bales in March, from 110.66 million bales forecast a month ago.

The market will be highly dependent on what happens with the global economy. It seems consumption would remain low into the 2023/24 season.

USDA is set to release its March Prospective Plantings report on Friday, which is the industry’s first official look at U.S. crop acres for the year.

An area known as the largest cotton patch in the U.S. is seeing another year of relentless drought, and with fields resembling the Dust Bowl, prospects for this year’s crop are dwindling by the day, as is the outlook for this year’s cotton acres.

This week, cotton prices shot higher, with even the October and December contracts above 83¢. The reversal comes after cotton prices plummeted lower in 2022.

Pressured by economic uncertainty both old and new crop futures lost a little over a penny on the week. That’s four consecutive weeks of lower closes.

As expected,  a previously unfilled gap at 75.70 from earlier trading did provide support. Oddly, all this occurred in the face of another excellent week of export sales.  So, it’s obvious traders are more concerned with macroeconomic factors than cotton fundamentals.

The Fed’s 25 basis point hike in the interest rate last week was it’s ninth consecutive with borrowing rates now at a 16-year high. Worse yet, Chairman Powell did not indicate slowing the pace despite recent bank failures.

As mentioned, last week’s export sales and shipments were outstanding with both exceeding the weekly average needed to meet estimates.

Current crop sales of 327,100 were up 41 percent from the week before, with Vietnam and China as primary buyers. Shipments totaled 280,100 bales, only slightly below the thirteen-year average. It appears we have found a trigger point to stimulate sales,  prices below 80 cents. Or better yet, it could be an early sign of improving demand.

The rate of cotton in Sindh is between Rs 17,000 to Rs 19,500 per maund. The rate of Phutti as per quality is between Rs 7,000 to Rs 8,000 per 40 kg. In Punjab province, the price of cotton was Rs 17,000 to Rs 20,000 per maund, and the price of Phutti was Rs 7,500 to Rs, 8,500 per 40 kg.

The price of Phutti was in the range of USC 0.73~0.86 Lbs. (17,000~20,000/ maund).

  Opening Of the Week Closing Of the Week Change
Lowest 75.00 73.00 -2.00
Highest 88.00 86.00 -2.00

Crude oil:

Crude Oil prices opened at USD 72.81 with the higher tone than last week’s closing figures.

In this week, crude oil prices showed an upward trend and closed with gain by the end of the week.

On the last day of the week, Crude Oil prices closed at USD 75.67 with an increase of 2.86 cents as of the opening figure of the week.

  Opening of Week Closing Of Week Change
Price 72.81 75.67 2.86

Exchange Rate:


In the last week values of the Pak, and rupee deprecated against US Dollar, and other significant currencies showed mix trend in both interbank and open markets.

At the end of week, Euro closed on a positive note with a figure of 1.09 and the British Pound also closed on a positive note with a figure of 1.23 against the USD.

  Selling Buying
LC Sight 282.63 282.58
LC 120 Days 271.43 271.38
Open Market 286.94 280.76

New York Cotton Future:


New York Cotton futures opened upward on Monday than the previous week’s closing figures.

NYCF showed an mixed sentiment with upward tone during the whole week, hence dropped on closing only but closed on the upper side by the end of the week.

On the last day of the week, MAY 2023 closed at 82.78 with an increase of 326 points.

On the last day of the week, JUL 2023 closed at 83.10 with a hike of 311 points.

On the last day of the week, OCT 2023 closed at 83.36 with a rise of 242 points.

On the last day of the week, DEC 2023 closed at 83.42 with a surge of 267 points.

Liver Pool Indices:


Liverpool Index A opened at 92.05 a low level of the previous week’s closing figure.

In this week Index “A” dropped the next day and later showed an upward march till closing and closed on the higher side by the end of the week.

On the last day of the week, LPI “A” closed at 96.70 with an increase of 465 points.

  Opening of the Week Closing of the Week Change
Index A 92.05 96.70 4.65

Pakistan Yarn Market:


The local yarn market sustained a stable in asking prices and an unhurried business bustle by the end of this week following NYCF and the local cotton market. The restricted activity was observed with a partial series of queries. Factories have inventories with sales pressures. The clients were in a state of perception and the prices of raw cotton on the world market are followed by the NYCF.

PSF prices were increased by Rs.3/kg dated 27th Mar 2023 by IFL in the domestic market. PTA and MEG prices remain tolerant in the international market plus the impact of US$ parity in Pak rupees on fiber imports. While crude oil prices will be down by the end of this week. PSF prices are expected to remain stable or slightly elevated next week.

Faisalabad’s trading market has slow activity & limited sales of PV and Viscose yarns. Measured business in PC/CVC has been observed, and the economic downturn and cash deficits persist. Traders were considerable with their stocks, and loom entrepreneurs were unyielding in their yarn management.

The followings are the latest querying prices of yarn in the local market based on ex-mills:


Count Price in Pak Rupees / 10 LBS Price US$/Bale
16/1 Carded Weaving 3325 – 3475 470 – 490
20/1 Carded Weaving 3425 – 3550 485 – 500
30/1 Carded Weaving 3700 – 3850 525 – 545
30/1 PC Carded Weaving 52:48 2900 – 3050 410 – 430
40/1 Combed Compact Weaving 4125 – 4250 585 – 600
60/1 Combed Compact Weaving 5900 – 6000 835 – 850
80/1 Combed Compact Weaving 8000 – 8200 1130 – 1160
40/1 CVC Carded Weaving 60:40 3600 – 3800 510 – 540

Export Yarn Market:


Export yarn market showed good business activity as customers floated decent numbers of inquiries.

Suppliers remained selling mood and were taking each and every inquiries seriously.

Although supplier showed firmness in offering their prices but they were showing flexibility in presence of firm bids and were negotiation prices to close business.

Cotton prices in domestic and international market remained firm and stable which also kept spinners to  on the stable sir..

Yarn prices also continued the sentiment of International market as suppliers want to get orders despite of high cost of production.

Like we are discussing cost of production has been increased huge, another movement from Govt was to increase the labour wages which will put another significant impact on the costing of factories.

At the moment, suppliers are trying to survive despite tough market conditions and trying their best to drag their losses till maximum time.

Although suppliers are selling on loss and losing hefty amounts but they are forced to place order in export just to secure their imports.

On the other side, customers remained in market and kept on checking prices with firm bids as well. Hence, we might see good business activity in days to come.

Chinese customers remained slow this week due to exhibition in Shanghai. As this was organized after 4 years and customers were all busy there meeting suppliers. However, there has not been any significant order placements during fair.

European customers showed improved activity this week and good numbers of orders have been placed.

Customers floated enquiries for both normal and specialized yarns against which reasonable deals were finalized.

Count USD / Bale
16/1 Carded Weaving 505 – 510
20/1 Carded Weaving 515 – 520
20/1 CM 530 – 535
16/1 CM 520 – 525
20/2 CD 540 – 545
24/2 CD 550 – 555
10/1 CARDED SIRO YARN WEAVING 450 – 475

Pakistan  Fabric Market:

The local fabric market continued its slow and dull trend for both narrow and wider width fabrics for another week.

Local fabric market remained flat in the absence of bulk inquiries from major finishing units and buyers.

Finishing units are placing their maximum orders to their own weaving units.

Limited trading activity reported in current week after tough negotiations. Therefore, towards the end of the week market closed with limited trading activity for both narrow and wider width fabrics.

Fabric prices remained stable due to firm yarn prices in current week.

Currently, weaving mills have booking in narrow width till 3rd week-April’2023 whereas they have coverage of their wider width looms till 3rd week-April’23 ~ End April’2023 and offer onward deliveries. Dobby looms are covered till mid-May’2023.

Construction Price US$/YD Ex Mill
16CDX12CD / 108X56 – 63″ 3/1 “S” TWILL PAK CTN 1.34 – 1.36
20CDX16CD / 128X60 – 63″ 3/1 “S” TWILL PAK CTN 1.20 – 1.22
20CDX20CD / 108X58 – 63″ 3/1 “S” TWILL PAK CTN 1.00 – 1.02

Export Fabric Market:


Business activity was witnessed from Korea, China, Japan and Bangladesh customers as they have exchanged good number of inquiries resultant decent quantity booking with selective suppliers.

The prices were further softened about 1~2% as yarn prices were soft due to less demand in the market in general.

Most of the suppliers do not have sufficient booking in hand thus they are offering end April onward deliveries now a days

European customers were active and suppliers have received orders from Germany, France, Italy and Portugal.

USA buyers have also exchanged their inquiries and orders are under discussion now which hopefully will materialize during next week.

Wider width suppliers have booking about 30~40 days in hand and offering end May onward deliveries.

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


Construction Price US$/YD CNF Far East
16CDX12CD / 108X56 – 63″ 3/1 “S” TWILL PAK CTN 1.35 – 1.37
20CDX16CD / 128X60 – 63″ 3/1 “S” TWILL PAK CTN 1.21 – 1.23
20CDX20CD / 108X58 – 63″ 3/1 “S” TWILL PAK CTN 0.99 – 1.01

Bed Linen & Towels:


Home Textile business is on slower side due to low activity from worldwide, it is expected that this trend will remain till Mid this year. Overall demand around the globe is on slower side which is effecting business volume in Pakistan and as well as other regions worldwide.

Raw material prices are also increasing due to depreciation of Pakistan Rupee, factories are getting tough time in running factories due to low business volumes.

Garments:


Pakistan’s garment industry has faced various challenges, such as political instability, energy crisis, and security concerns in the recent past.

Additionally, competition from other low-cost garment manufacturing countries, such as Bangladesh, Vietnam, and Cambodia, has increased in recent years, making it challenging for Pakistan to retain its market share.

Globally many countries have experienced a decline in demand for clothing, as consumers have cut back on spending due to economic uncertainty.

For new orders, factories are offering June 23 onward deliveries, and also factories are going through a tough phase as they are unable to manage their fix costs.

Sustainability is crucial in the garment industry to reduce its environmental impact, improve working conditions, meet consumer demand, increase resource efficiency, and future-proof the industry.

Going Forward:


In the domestic cotton market, dullness prevailed buyers are not interested in buying due to no further sale of textile products. Spinners are confused about the market situation.

For the local yarn, it is estimated that consumer demand drives local yarn rates with leisurely activity. Further price changes will be made following market conditions and end-user demands, which will determine the price level.

Export yarn market remained under nominal business activity. Customers showed good interest n handsome numbers of enquiries were received against which order placements was also decent. So, we might see same pace of business activity in days to come,

For coming week, we may foresee slow sentiments with limited trading activity to continue for both narrow and wider width looms in domestic market.

Business activity was noticed in export fabric as suppliers are getting orders from Far Eastern and European customers. Prices were softened further about 1~2%. It is expected that limited business activity will remain in the market in days to come as well however prices may remain in same range.

The Pakistan’s garment industry has the potential to continue to grow and contribute to Pakistan’s economic development in the years to come.

It is expected that activity in Home Textile will remain slow in next quarter of the year, and might improve after June/July 2023

 

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