Chaos over yarn price settled thru’ consensus

The recent tension between textile millers and apparel exporters over high yarn prices has been settled amicably as both sides have temporarily reached a consensus among themselves over the dispute.

Both the two parties have verbally agreed to fix per kg 30s (single) of yarn at $ 4.20.

The decision was made at a meeting of top leaders of the Bangladesh Garment Manufacturers and Exporters Association, the Bangladesh Knitwear Manufacturers and Exporters Association and the Bangladesh Textile Mills Association on Saturday night.

The meeting was attended, among others, by BGMEA president Faruque Hassan, BKMEA president AKM Salim Osman, vice president Mohammad Hatem, former BGMEA president Kutubuddin Ahmed and several other senior leaders in apparel and textile sectors.

However, both parties also agreed to reduce yarn price step by step compared to the global market, said the meeting sources.

As per the agreement, if the cotton price index crosses 100 points, the prices of yarn will be increased further and if it goes down below 85 points, prices of yarn will also be decreased.

For the last couple of days the cotton price index hovering 93 points 96 points.

“As the globe faces a cotton crisis, this agreement has given us a great relief,” said Kutubuddin Ahmed, chairman of Envoy Group and former president of BGMEA while talking to The Business Post.

“Now, it is up to the apparel manufacturers to put pressure on their respective buyers to increase their price,” he added.

On the other hand, the terry towel and the home textile manufacturers are disappointed as BTMA did not pay any heed to their request in this regard.

“We are exporting goods worth billions of dollars but we cannot expand our business any further due to the high price of yarn. That’s why, we have also requested the BTMA on several occasions to consider our problem as well,” said Bangladesh Terry Towel and Linen Manufacturers and Exporters Association chairman M Shahadat Hossain while talking to The Business Post.

“We have also requested the government to intervene in the spiraling yarn price hike,” he added.

Meanwhile, home textile and terry towel exporters on August 16 urged the government to ease the yarn import process.

From August 22, the yarn manufacturers are bound to sell their yarn $4.20 a kg, according to the agreement.

Bangladesh has 433 yarn manufacturing mills (spinning mills) and they can meet 80 per cent of the domestic demand.

Before Covid-19 pandemic, per kg 24s (single) and 30s yarn prices ranged between $ 2.25-$ 2.30 in the domestic market. But now it costs $ 4.25-$ 4.30, said the textile manufacturers.

In the global market, yarn prices increased to $ 3.65 from $ 2.10 since the outbreak of the virus, said manufacturers.

However, yarn manufacturers claimed that yarn prices increased due to higher demand in the domestic market.

“Cotton prices in the international market increased by 47 per cent since January.”

In reply to a question Fazlul Hoque, vice-president of BTMA, told The Business Post, “Despite the sharp increase in global price, we have increased yarn prices by only 37 per cent. Yarn prices are also rising due to higher cotton prices in the global market. ”

Bangladesh makes 75 per cent of apparel from cotton-based yarn and around 60 per cent of total production cost was spent on fabrics.

Due to the high price of yarn, the production cost increased by 30 per cent, apparel manufacturers

said, adding that the buyers did not increase the price by more than 10 per cent.

Due to high yarn prices, some garment owners have already started

importing yarn from India and others indicated they would follow the same path.

But due to a bar on partial shipment in the land port, they cannot meet the buyer’s lead time.

The BGMEA, BKMEA and other textile sector associations urged the government to remove the bar on the partial shipment of yarn.