Apparel producers have apprehended that they would lose long-term competitiveness for rising in yarn prices further.
The country’s spinning millers hinted that the yarn price is likely to be increased by 15 to 20 percent at the end of this year.
The yarn, key raw material for apparel production, price may make upward adjustments from the next December because of the rising cotton prices in the global markets.
Rising cotton prices will also hit profit margins of textile and apparel players in the country due to their inability to pass on the high production cost on to consumers, the sector insiders said. Faruque Hassan, President of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President told The New Nation, “Definitely, the purchasing orders will be reduced as it will be very difficult for us to negotiate with the buyers.”
“Shipping, freight and other costs have already been increased abnormally. Along with these, with the high yarn price, the production cost will be increased sharply and the buyers will be unwilling to sourcing goods from us. It will be very dangerous for the sector,” he added.
Tendency of nearshoring among the buyers will be enhanced in order to reducing the sourcing cost, he added.
“Rise in yarn price should be reasonable. If the RMG sector survives, the spinning miller will survive,” said Shahidullah Azim, Vice-President of the BGMEA.
“We will have to ask for a higher rate for new orders. If the yarn price hikes suddenly, we will have to incur a loss. So, the spinning millers should refrain from the thinking of high profit at the moment,” he added.
Mohiuddin Rubel, BGMEA’s Director, said that the country’s apparel producers will lose long-term competitiveness with the high yarn prices.
Hinting the price may increase by 15 to 20 percent, Mohammad Ali Khokon, President of Bangladesh Textile Mills Association (BTMA), said, “Price of cotton goes over $1 per pound in international markets, so the price of yarn in the local market needs a hike.”
Earlier in August at a meeting between the apparel exporters and the textile millers, it was decided that the widely consumed 30-carded yarn will be sold at $4.20 per kg if cotton prices hovered between $0.85 and $1 per pound. Khokon said cotton prices have gone up to between $1.05 and $1.07 per pound in recent days. So, there is a need for price revision, he added.
On the contrary, if the cotton price goes below 85 cents per pound, there will be a downward price adjustment.
“We have no choice but to hike the price. We advise the apparel exporters to negotiate price before taking any export orders,” said the BTMA president.
Earlier, a casual dress exporter asked $ 2.50 for style-400-process laser destroy-per hour 150pcs and for style -433 process laser destroy- per hour 90pcs $3.00 which was in 2020 $2.15 and $ 2.50 respectively. Now their price is above average $3.15, depending on the item.
The textile players hope they will be able to ask above 20 to 30 percent more than the previous season for upcoming orders. But, now they are in a dilemma negotiating the price with the buyers regarding the cotton price hike, industry insiders said.
