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The dispute between garment and spinners over the prices of yarn could be resolved amicably after both sides softened their stances, in relief for Bangladesh’s apparel industry rebounding from the pandemic-induced shipment collapse.
Garment and terry towel manufacturers and exporters have demanded the spinners reduce the prices of yarn and keep the supply stable at a time when export orders are growing fast.
The leaders of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) made the demand at a meeting with the Bangladesh Textile Mills Association (BTMA), the platform of spinners and weavers.
Both parties have softened their stances. The BGMEA postponed its press conferences scheduled yesterday, while the BTMA also cancelled its informal discussion with a group of journalists scheduled on Monday. Now they are negotiating the price of yarn.
“Yarn prices are too high in Bangladesh compared to other countries,” said Faruque Hassan, president of the BGMEA.
The prices have been increasing in the domestic markets since September last year, he said.
“We also need a stable supply as many spinners are not supplying the yarn on time to garment manufacturers despite making the payment.”
“We do not want to engage in any disagreement. So, we placed our demand in the meeting with the BTMA.”
Mohammad Ali Khokon, president of the BTMA, attended the meeting virtually as he is now abroad.
Exporters say they need an adequate supply of yarn as they have a lot of work orders from international retailers and brands.
The current price difference of the 20-carded yarn in Bangladesh is 33 per cent compared to those in other countries, said Shahadat Hossain Sohel, chairman of the Bangladesh Terry Towel & Linen Manufacturers & Exporters Association.
The yarn sells for $4.30 per kg, which is $3.24 in other countries, he said.
“Moreover, the spinners are not supplying the yarn on time and are changing the price frequently.”
He said he paid Tk 67 lakh to a local spinner last month. But, when the time of the delivery came, the company hiked the rate again.
“It may take more time to receive the delivery of the yarn,” Sohel said.
Mohammad Hatem, senior vice-president of the BKMEA, said the price difference of the widely-used 30-carded yarn in Bangladesh and those imported stood at 60 cents to 70 cents.
In some cases, the gap is more than $1 per kg.
“The prices of yarn have been hiked at a time when international retailers and brands are coming up with a lot of orders.”
Hatem, however, admitted that the price of cotton, the raw material of yarn, had increased worldwide to some extent.
“However, if the cotton prices increase by 10 per cent in the international market, local yarn manufacturers will hike the price by 20 per cent.”
Monsoor Ahmed, chief executive officer of the BTMA, said the prices of cotton had gone up in the international markets abnormally. Hence, the prices of yarn increased in the domestic markets.
Currently, the widely consumed 30-carded yarn is sold between $4.30 and $4.35 per kg in the domestic markets.
Cotton was traded between 91.75 cents and 91.76 cents in the international futures markets yesterday, up from 83 cents to 85 cents in January and February.
Bangladesh relies on imports to meet its entire requirement for cotton as it does not produce the raw material. It imported 8.2 million bales of cotton in the last fiscal year of 2020-21, spending nearly $3 billion.
The import cost of a pound of cotton is $1.07, excluding production costs, Ahmed said.
(TDS)
