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Rising yarn prices, apparel sector in chaos

  • Published at 07:55 pm August 10th, 2021
According to the BTMA, about 80 textile mills are currently producing various types of synthetic yarns and fabrics including polyester, VSF, tensile, and modal Bigstock

Apparel and terry towel exporters allege that the spinning millers unfairly and abnormally increased yarn prices amid rising demand

The rising price of yarns in the country for several months now has created a chaotic situation for textile millers and apparel exporters.

Apparel and terry towel exporters allege that the spinning millers unfairly and abnormally increased yarn prices amid rising demand and soaring cotton prices in the global market.

This put the exporters in a sticky situation, they claimed, as yarn prices have repeatedly been going up for the last 7-8 months.

However, textile millers denied the allegation and claimed that they are not hiking prices intentionally. 

The price of cotton is rising in the international market. Moreover, the cost of importing cotton has also increased multiple times due to Covid-19, they said. 

However, there is no opportunity to increase the price of yarn as per wish in a free market economy, they also said.

According to industry insiders, the yarn market experienced the most unstable situation during April-May of this year. 

Also Read - Knitwear makers, exporters baffled by soaring yarn prices

Thirty-count yarn, which is being used to manufacture apparel products, is being sold at $4.25-$4.40 per kg, higher from $3 in November last year and $4 in March this year.

Md Mizanur Rahman, an AGM of Akij Textiles Mills Limited, said that the price of cotton has gone up in the international market so there is no way but to increase the price of yarn. 

“The cost of importing cotton from Kazakhstan, China has increased by $4,000-5,000 per container, the cost of import has also increased, and the demand for yarn in the country is also high. So naturally the price of yarn has gone up,” he added.

A vice-president of BTMA, requesting anonymity, said that there is no opportunity to control the price of yarn domestically. 

“Cotton prices have risen by 6%-10% in the last few months, as the cotton production declined due to the pandemic which had an impact on the global market. Its production may decline further in the coming seasons,” he added.

He also suggested that they need to find a way to get higher prices from buyers without conflicting with each other over this issue.

Fazlee Shamim Ehsan, vice-president of BKMEA, said that the price of cotton has increased by 40-60 cents in the global market in the last two years, but the price of cotton in Bangladesh has increased by more than $2 which is illogical and abnormal.

“The price of yarn has risen at a much higher rate than the global market. And there is no basis for saying that the price has gone up as the demand has increased, it is against business ethics and it can’t be a statement of an industrialist,” he added.

A senior official of AKH Eco Apparels Ltd, said that the price of yarn in Bangladesh is 50-70 cents higher per kg than any other South Asian country. But their foreign buyers do not agree with it. 

Also Read - BTMA: ‘Made in Bangladesh’ initiative needs fixed VAT on yarn

“We cannot take purchase orders because of the abnormal rise in yarn price as the buyers do not want to pay higher prices for garments. But we have to take orders at lower prices to retain them,” he added.

At the end of 2019, the price of raw cotton in the international market was $0.70 per pound, which is now $1.1.

The price of yarn is also the highest in Bangladesh among South Asian countries. 

The price per kg of 30-count yarn is $4.35 in Bangladesh, which is $3.8 and $3.6 in Pakistan and India respectively, said industry insiders.

However, some sources from apparel and terry towel sectors have demanded the elimination of some existing barriers to import yarn.

They have also urged the government to allow yarn import at duty-free and without a bond licence.

They have taken initiative to send letters to the concerned ministries, divisions, and the Competition Commission to approve their demands. 

Earlier, the apex organizations of apparel exporters, the BGMEA, the BKMEA and the BTTLMEA held a meeting on Sunday. 

They alleged that textile millers are raising the price of yarn intentionally.

Later, BTMA, an association of textile owners, also called a meeting on Monday to state their position on this situation, but canceled the meeting at the last minute due to "unavoidable circumstances."

At the same time, BGMEA, BKMEA and BTTLMEA called a joint press conference to highlight the problems created due to soaring yarn prices on Tuesday. 

But they also postponed their scheduled briefing citing the same reason at the last moment.

However, several top apparel and textile manufactures said that it would be counterproductive for both of them if they fail to recover from the chaotic situation caused due to yarn prices. 

The country's reputation will be tarnished and competing exporter countries will capture the opportunity, they also feared.

According to BTMA, domestic spinning mills supply 80% of the yarn of export-oriented knitwear factories when it is 35-40% of woven factories. 

In 2019, the spinning mills supplied 1 million tons of yarn worth $3.08 billion to exporters which dropped to 569,000 tons last year worth $2.7 billion.

Meanwhile, a joint meeting with the BGMEA, BKMEA and BTMA is scheduled to be held on Tuesday (August 10) evening to resolve the issue. Nothing was known about the meeting until the filing of this report.