Market Report- Pakistan 16 March 2024

Pakistan Local Cotton Market:
(The cotton market locally is steady, but prices worldwide are unsure. People buying cotton are waiting to see if prices will go down, and spinners who make cotton into thread are being careful because the local cotton season is over. What happens next depends to prices internationally)

1- Local cotton market prices stayed steady this week due to sluggish business activity. Global cotton prices, which had previously surged, are now declining, possibly due to speculation. There’s uncertainty regarding whether international prices will stabilize or drop further. Consequently, demand for textile products has not seen an increase.
2- The March USDA monthly supply/demand report brought positive and supportive numbers. Key highlights include a 330,000 bales reduction in the 2023 U.S. crop. Exports for the 2023 crop marketing year remained unchanged from February’s projection. Additionally, world use/demand for the 2023 crop year saw a 480,000 bales increase, marking the second consecutive month of upward revisions.
3- USA Old crop prices (May and July futures) have dipped from nearly $1.00 to around 95 cents, losing about a nickel. New crop December futures are fluctuating between 83 to 85 cents. The spread between old crop (May) and new crop (December) has narrowed by 4 to 6 cents, from almost 16 cents to less than 12 cents, suggesting either a decline in old crop prices relative to new crop or an increase in new crop prices relative to old crop.
4- The Pakistan Cotton Ginners Association (PCGA) forecasts 84 lac bales of cotton production this year. Rumors suggest that including 15 lac bales of unregistered cotton could push production to 1 crore bales. Textile spinners require 1.3 to 1.35 crore bales. 800,000 bales are expected from Afghanistan, and 20 lac bales from foreign imports will meet spinner needs.
5- Indian domestic cotton prices surged 10-12% in the last two weeks, aligning with global trends. However, global textile demand remains stagnant, affecting domestic markets. Despite the recent festive season, domestic demand failed to meet expectations, though home textiles outperformed apparel. An ITMF survey in January highlighted weak international demand.
6- China holds its cotton for its own mill use and buys in the export market to bolster its reserve stocks. They are very accustomed to holding cotton in storage for some four to six years. The Indian supply is mostly available only to Indian mills given the big appetite of the world’s second largest spinning industry, although they do export a small portion of their production.
7- Last week, cotton prices in Punjab and Sindh showed firmness from Rs 20,500 to Rs 23,000 per maund, (USC 0.89~1.00 lbs). In Sindh, cotton rate was Rs 20,500 to Rs 22,500 per maund, while in Punjab it ranged from Rs 21,000 to Rs 23,000 per maund. KCA was same at rs. Rs. 21,500 per maund and PSF remained same at rs. 367 PKR/kg.

Local Yarn Market:
(The local yarn market in Pakistan is expected to maintain strong prices, with business activity relying on end customer demand and local prices)

1- The local yarn market’s prices remained stable, with average business activity. However, mills reduced production due to high costs and bank markups.
2- PSF prices remained stable this week and are expected to remain stable by next week.
3- The Faisalabad market had limited activity in fine cotton and PC/CVC whereas PV & 100% cotton counts are in demand.

Export Yarn Market:
(The export yarn market remained under improved business activity as customers placed orders actively. Suppliers were also interested to sell good quantities in presence of firm bids)

1- The export yarn market remained under improved business activity in terms of business activity.
2- Customers floated handsome numbers of inquiries against which business has been confirmed as well.
3- Generally suppliers are now showing a slightly flexible tone and trying to catch any orders which is coming near to offered prices.
4- Cotton prices in Pakistan are stable as the crop has been finished and suppliers have to import cotton from other origins which is available at high prices.
5- At the same time, cost of production is hitting spinners very badly. Many suppliers are planning to close their productions before arrival of new cotton crop due to severe losses.
6- It is expected that the market will show good business activity in days to come as now prices are getting settled and both customers and suppliers are coming to an agreement on where the business will be closed

Local Fabric Market:
(Improved business activity was seen in local baric market. Expectations for the forthcoming week anticipate a continuation of prevailing market sentiments, projecting similar conditions for both narrow and wider-width fabrics)

1- Throughout the current week, the local fabric market experienced improved activity, although trading remained somewhat subdued for both narrow and wider-width fabrics.
2- Local buyers actively engaged, initiating inquiries and securing orders post-tough negotiations, at marginally higher prices.
3- Trading concluded with minimal activity across both narrow and wider widths.
4- Presently, weavers have outlined production schedules, with narrow-width looms slated for operation until 3rd week of April 2024, and wide-width looms fully booked until the month’s end, with commitments extending to subsequent deliveries.

Export Fabric Market:
(Export fabric market is hitting badly now a days as there is less demand in general and customers are waiting for competitive prices. They felt that current prices are much higher)

1-Export-based business is hitting badly due to slow demand and high asking prices.
2- Customers are exchanging inquiries, but there is no feedback as they feel that current prices are higher than their psychological level.
3- The asking prices are the same as last week due to stable raw material prices.
4- Narrow width suppliers are book till mid of April mainly and offering end April onward deliveries.
5- European and USA buyers remained aside of buying due to less demand in general
6- Wider-width suppliers are keeping their prices stable.
7- The suppliers are booked until mid-May and are offering onward deliveries.
8- Customers are waiting for the right time to buy as they feel that current prices are much higher.

Bed Linen and Towel:
(For the home textile, slow week with a lot of concerns over increasing inflation and energy / production costs. A revival policy backed up Govt. is very much needed at this moment)

1- A continuation of past week with No such significance in improvement. Business situation is becoming more and more unstable as observed in recent week as well.
2- 3rd and 2nd tier factories are running on shift basis now to create production back log and enough quantities to cover machine expenses. It is indeed a very worrisome situation for such 70% of the industry.
3- Big and stable names are somehow managing to get orders and bookings due to their hefty investments in R&D and marketing coupled with financial stability.
4- If such situation prevails, only some major players will be left in the field. Urgent and essential actions by authorities are now unavoidable to save 70% of the HT industry which is based on 3rd and 2nd tier factories and processing.

Garments:

(Pakistan’s garment industry is struggling due to a dearth of orders. However, purchasers are steadily putting their trust in and placing orders)

1- Overall, Pakistan’s clothing industry is experiencing unequal commercial activity, manufacturers not receiving enough orders to fill their 100% production capacity. Because of inflation, several retailers and brands have curtailed their purchases.
2- Normally, factories receive projection-based orders from large retailers in current season, but the market sentiment has bit slowed in the 1st quarter of 2024 compared then factories’ expectations, owing in part to global inflation.
3- For onward orders, factories are proposing deliveries by the end of June 2024.
4- In the clothing business, sustainability is crucial for lowering environmental impact and enhancing working conditions.
5- As far as denim, the global market is still fighting inflation and trying to revive yet the manufacturers are hopeful for the upcoming seasons as consumer still has a good amount of demand for a sustainable.

Crude Oil:

1- Crude Oil prices opened at USD 77.93 with lower level as compared to last week closing figures. in this week, crude oil prices showed upward trend and closed on higher side by the end of week.
2- In last day of the week, Crude Oil price closed at USD 81.04 with increase of 3.11 USD cents as of opening figure of week

Exchange Rate:

1- In last week values of Pak rupee appreciated against US Dollar’s, other major currencies showed mix trend in both interbank and open markets.
2- At the end of week, Euro closed on a positive note with figure of 1.08 and British Pound also closed on positive note with figure 1.27 against USD.

New York Cotton Future:

The New York Cotton futures started the week lower than the previous week’s closing figures. NYCF showed a downward trend in this week and closed on the lower side by the end of the week. The closing figures for the week were as follows:

1- On the last day of the week, MAY 2024 closed at 93.94 with a decrease of 12 points.
2- On the last day of the week, JUL 2024 closed at 93.59 with a drop of 75 points.
3- On the last day of the week, OCT 2024 closed at 86.80 with an increase of 38 points.
4- On the last day of the week, DEC 2024 closed at 83.68 by rose of 27 points.

Liver Pool Indices:

1- Liverpool Index A was opened at 104.95 on higher level from the previous week of closing figure.
2- In this week Index “A” showed downward trend and closed on lower side by the end of week.
3- At last day of the week, LPI “A” closed at 99.80 with decrease of 515 points..