The garment-spinning dispute over yarn prices could be settled amicably after both sides softened their stance to ease the burden on the Bangladeshi garment industry, which is recovering from the pandemic-induced shipping collapse.
Garment and terry manufacturers and exporters have asked spinning mills to lower yarn prices and keep supplies stable at a time when export orders are growing rapidly.
For all the breaking news, follow The Daily Star’s Google News channel.
This is what the leaders of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) called for at a meeting with the Bangladesh Textile Mills Association (BTMA), the platform for spinners and weavers.
Both parties have softened their stance. BGMEA postponed its press conferences scheduled yesterday, while BTMA also canceled its informal discussion with a group of journalists planned for Monday. Now they are negotiating the price of the yarn.
“Yarn prices are too high in Bangladesh compared to other countries,” said Faruque Hassan, President of BGMEA.
Domestic market prices have increased since September last year, he said.
“We also need a stable supply, as many spinning mills do not deliver the yarn to the clothing manufacturers on time despite the payment.”
“We do not want to enter into disagreements. That is why we made our request at the meeting with the BTMA.”
Mohammad Ali Khokon, President of the BTMA, practically attended the meeting since he is now abroad.
Exporters say they need an adequate supply of yarn as they have many work orders from international retailers and brands.
The price difference of 20-carded yarn in Bangladesh is currently 33 percent compared to 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 the equivalent of $ 3.24 in other countries, he said.
“Also, the spinners don’t deliver the yarn on time and often change the price.”
He said he paid Tk 67 lakh to a local weirdo last month. But when the time for delivery came, the company increased the rate again.
“The yarn may take longer to be delivered,” said Sohel.
Mohammad Hatem, senior vice president of the BKMEA, said the price difference between the widely used 30-carded yarn in Bangladesh and the imported one was 60 cents to 70 cents.
In some cases, the gap is more than $ 1 per kg.
“Yarn prices have increased at a time when international retailers and brands are placing a lot of orders.”
Hatem admitted, however, that the prices for cotton, the raw material for yarn, had risen in some areas around the world.
“But if cotton prices in the international market rise by 10 percent, local yarn manufacturers will increase the price by 20 percent.”
Monsoor Ahmed, CEO of BTMA, said cotton prices had risen unusually in international markets. Therefore, the price of yarn in the domestic markets increased.
Currently, the widely used 30-carded yarn is sold in domestic markets between $ 4.30 and $ 4.35 per kg.
Cotton was traded yesterday on the international futures markets between 91.75 cents and 91.76 cents, in January and February it rose from 83 cents to 85 cents.
Bangladesh relies on imports to meet all of its cotton needs because it does not produce the raw material itself. It imported 8.2 million bales of cotton for the last fiscal year 2020-21 and spent nearly $ 3 billion.
The cost of importing a pound of cotton is $ 1.07, excluding production costs, Ahmed said.