Cotton, yarn prices come down in global market

Prices of cotton and yarn have declined sharply in the global market after hitting the peak in May.

Demands for clothing products plummeted due to soaring inflation mostly in the US and European Union (EU)

Prices of cotton and yarn rose gradually due to supply chain disruption caused by Russia-Ukraine war and Covid-19 pandemic.

To prevent inflation, the US government increased bank loan interest affecting the commodity market and reducing prices along with cotton prices.

The global media report said cotton price came down by 20 per cent in international market and 10 per cent in India.

The Nasdaq data showed per pound cotton was booked at $1.03 on June 27 which was $1.433 on 22 June. On December 2 last year, per pound cotton was sold at $1.037. Due to low demand and cotton price cut, yarn price also came down by around $ 0.7 per kilogramme this month in Bangladesh.

In early June, a kilogramme of 30 counts of yarn was booked at $5.2 but now it is $4.5.

Industry insiders claimed that globally, especially the US and European Union (EU), are facing high inflation which forced consumers for low purchase of clothes. For this reason, buyers have reduced placing orders.

Due to the Russia-Ukraine war, demand for apparel and textile goods dropped sharply, said Anwar-ul Alam Chowdhury Parvez, President of Bangladesh Chamber of Industries and former president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA).

As per the global media and buyers’ feedback, apparel purchase will continue to drop if the war prolongs. This is why orders are likely to decline more and more. “This is the main challenge for us to face,” he said.

Bangladesh is manufacturing around 75 per cent cotton-based products and around 99 per cent cotton demands are met through import. India is the largest cotton supplier to the country. Cotton price in India rose by 12 per kg within this week, their media report said.

When the Covid-19 pandemic started global production and supply chain collapsed. At the same time, many western countries and brands banned China’s Xinjiang cotton-based textile and apparel goods due to violating human rights on Uyghur Muslim.

For this reason, the world’s largest apparel and textile producer China was forced to import cotton from international market creating instability in the cotton market.

Since the end of 2020, cotton price has jumped to $1.548 on May 4 doubling the yarn price in the local market from $2.4 to $5.2 a kg.

Anwar-ul Alam said currently yarn manufacturers are bringing down the price out desperation due to low demand. “But yarn price will drop more after six months when recent bookings of cotton-based yarn will come.”

However, due to high demand for home textile and clothes, textile millers failed to meet local demand and manufacturers are bound to import.

“But now we are facing order crisis and booking ratio dropped to 60 per cent compared to just three to four months ago,” Bangladesh Textile Mills Association (BTMA) Vice-President Md Fazlul Haoque told The Business Post.

“We are forced to reduce yarn price due to low demand though current price is lower than our manufacturing cost. It is too risky to stock cotton and yarn while global market is heading towards unpredictability,” Fazlul Haoque said.

Apparel manufacturers claimed that due to global inflation their orders slightly dropped and the current crisis will not heavily affect their export revenue.

Cotton price drop will help them to reduce product price despite high inflation.

“Due to high inflation for Russia-Ukraine war, our booking capacity shrank by 80 per cent. But we are focusing on marketing to receive more orders,” former BGMEA President Siddiqur Rahman told The Business Post.

Bangladesh Knitwear Manufacturers and Exporters Association Executive President Mohammad Hatem told The Business Post that the current global inflation would not hit their export because most of them were manufacturing basic and low-price clothes.

“Recent cotton price cut will help reduce clothes price and which will ultimately encourage buyers to place new orders to Bangladesh,” Hatem hoped.