Unit prices see a good leap

Bangladesh witnessed a significant growth in prices against exports of apparel goods to the US and the EU markets during the first nine months of the current fiscal year.

The growth was 6.5 per cent for the US and 10.7 per cent for the EU region on the basis of unit prices despite global high inflation and pandemic, according to the data of the United States International Trade Commission (USITC) and EuroStat.

Besides, volumes have also increased in those markets helping achieve excellent growth rate.

Due to increase in unit prices, Bangladeshi exporters could avoid loss despite jump in raw materials price, especially yarn price that has doubled compared to pre-Covid-19 period.

Industry insiders claimed that many buyers came to Bangladesh as an alternative sourcing hub due to China’s energy and zero Covid-19 policy, Vietnam and India’s Covid-19 lockdown and Myanmar’s political unrest.

Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President Faruque Hassan said, “Previously buyers didn’t pay us. But now they are starting to pay fair price though this is not enough if compared to our manufacturing cost and investment.”

“We have to increase our bargaining capacity with buyers to ensure fair price,” he added.

Bangladesh’s apparel sector exported to the world market worth $38.52 billion with 34.87 per cent growth during the July-May period of the current fiscal year.

Of them, around 21 per cent came from the US and 50 per cent from the European Union (EU), according to the Export Promotion Bureau (EPB).

The USTC data shows Bangladesh export volume to the US market rose by 36.5 per cent to 1.89 billion pieces in the first nine months of the current fiscal year. It was 1.38 billion pieces during the same period of the FY21.

Knitwear goods volume rose by 40.2 per cent and woven goods by 31.2 per cent.

During this time earnings shot up by 47.4 per cent to $6.28 billion which was $4.26 billion during the same period of the previous fiscal year. Knitwear sector growth rose by 63.2 per cent and woven sector by 39.2 per cent.

In this period, average unit price rose by 6.5 per cent to $3.3 for US market which was $3.1 during the same period of the previous fiscal year.

Bangladeshi exporters received on average $2.1 for per unit of knitwear clothes in the US market during July-March period of the current financial year. It was $1.8 in the first nine months of the previous fiscal.

For per unit of woven item, it was $5.2 on average during the first nine months compared with $4.9 year earlier for the US market.

On the other hand, the Eurostar data showed that the EU region’s buyers, Bangladesh’s main export earnings destination, purchased per kilogramme of clothes for €14 with 10.7 per cent growth.

It was €12.6 in the same period of the previous fiscal year.

During this period, the price of per kilogramme of knitwear clothes rose by 13.2 per cent to €13.4 which was €11.8 in the same time of the previous fiscal year. The price of per kilogramme of woven product rose by 7.1 per cent to €15.4 which was €14.4 in the July-March of the FY21.

The Eurostar data showed, in the July-March of FY22, clothes values in the EU market rose by 33.2 per cent to $12.58 billion which was €9.48 billion in the same time of the previous fiscal.

During this time, knitwear goods values rose by 38.1 per cent to €8.19 billion, woven products values rose by 25 per cent to €4.39 billion.

Even buyers also increased product volumes from 747 million kilogramme to 898.5 million kilogramme, up by 20.3 per cent in the first nine months of the current fiscal year compared to the same time of the previous fiscal year.

During this time, knitwear products volume rose by 22 per cent to 313.3 million kilogrammes and woven products volume by 16.7 per cent to 285.2 million kilogrammes.

According to the QIMA, while South Asia is a time-tested sourcing hub for textiles and apparel, demand for its manufacturing capacities was not limited to this product category.

Industry insiders, however, said the buyers came to Bangladesh on a trial basis due to supply chain disruption and Bangladesh is dependent on others to meet raw materials demand.

Due to lack of available raw materials from local sources Bangladesh takes more lead time than its
competitors.

“If the buyers face the same problem in Bangladesh, they will return to their previous sourcing country or India. So, if we want to make them permanent buyers, we should increase our supply chain capacity,” Kazi Iftekhar Hossain, President of Bangladesh Garment Buying House Association, told The Business Post.

“We are manufacturing 75 per cent cotton-based apparel goods. If we switch to manmade fibre, it will make us competitive as China, Vietnam and India too import raw materials. So, it is the time to invest in manmade fibre to make a strong supply chain,” he said.