Textile millers once again increased yarn prices by $0.20 per kilogram citing a rise in rates in the global market as an excuse. To tackle this issue, apparel makers are switching their purchase source, moving towards imports because it costs them less.
The price of per kg 30-count yarn rose by $0.20 to $4.9, which was $4.7 just a week ago, says data from the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA).
Apparel exporters claimed that yarn prices are much higher in Bangladesh compared to any other country, and this is why buyers are refusing to adjust clothing item prices with yarn price hikes.
Existing regulations barring partial shipments through Benapole land port are however preventing apparel exporters from importing yarn within a short timeframe, which in turn is increasing the lead time, insiders said.
Textile millers said cotton prices have increased in the global market due to low supply, and they have increased yarn prices locally to make adjustments. Per pound of raw cotton now sells for $1.2, which was $1.04 on the first day of December last year, according to the NASDAQ.
Fakir Kamruzzaman Nahid, managing director of Fakir Fashion, said, “We do not have an alternative option except yarn imports because buyers know that yarn prices in the international market are cheaper.
“So, we have to import the yarn. It is true that cotton prices are high in the international market, but local spinning mills owners are increasing yarn prices disproportionately to the actual cotton prices.”
Mohammad Ali Khokon, president of the Bangladesh Textile Mills Association (BTMA), said, “Cotton prices in Bangladesh depend on import rates. But India, Turkey, and others yarn-producing countries locally source their cotton.
“This is why they can sell at low prices. However, our prices are not that high compared to theirs.”
In early 2021, the US and the European Union (EU) clothing brands banned clothes made in the Xinjiang region of China over allegations of forced labor. Beijing has been reportedly cracking down on the Muslim minority population in that region.
European Members of Parliament also adopted a regulation against Xinjiang’s cotton products for the same reason.
To circumvent the ban and continue exports, China – the world’s largest apparel exporter – has been purchasing a huge amount of cotton from the international market to fulfill their demand as an alternative to Xinjiang’s cotton, and it is causing a supply shortage.
Industry insiders claimed that it is one of the major reasons behind cotton price hikes.
Meanwhile, apparel exporters said in August last year, when cotton prices had reached a record high in the global market at $1.20 per pound, local textile millers were selling cotton yarn at $4.4 per kg, but they have now increased the prices to $5.
Fazlee Shamim Ehsan, vice president of BKMEA, said, “We cannot take new work orders because we do not know how high the yarn prices will get. They [spinning mill owners] are creating anarchy by forming a syndicate to hike yarn prices.
“In August last year, we formed a regulation with the BTMA, and both parties agreed to set yarn prices jointly if cotton prices increase or decrease. But they do not abide by this agreement.”
BTMA President Mohammad Ali Khokon, however, said, “How will we reduce or reset yarn prices when the market does not remain stable even for a day? It is now difficult to import cotton on time, and we are focusing on maintaining the supply chain at any cost.”
