Local garment exporters are feeling the pinch of a sudden unusual rise in yarn prices in the local and international markets, a development that is threatening to derail the recovery of the apparel shipment from the pandemic-induced slowdown.
Yarn prices rose 40 per cent between December and June because of the cotton price hike in the international futures markets, exporters say.
Yarn accounts for 50 per cent of the cost to produce a t-shirt or a garment item, while button, zippers and other accessories comprise the rest.
The yarn prices increased in the local markets because of the cotton price spike, the abnormal rise in freight charge, and the hike in utilisation capacity at the mill level due to the resumption of production after a pause caused by lockdowns. In the international futures markets, cotton was traded between 88.21 cents per pound and 87.72 cents per pound on June 11, up from 72.65 cents to 72.90 cents on December 14.
Cotton prices soared 21 per cent year-on-year to $1.99 per kilogram in the January-March quarter of 2021, World Bank Commodities Price Data showed.
