Tea prices plunged again at a weekly auction on Tuesday, after a brief rise in the previous session, dragged down by inferior quality leaf near the end of the season, brokers said.
The country’s tax authority on Monday trebled regulator duties to 15% on imports of tea to discourage overseas buying amid a drop in local prices due to ample supplies.
Bangladeshi tea fetched an average of Tk97.16 ($1.25) per kg at the auction, sharply down from Tk118.81 at the previous week’s sale, an official from National Brokers Limited said.
Nearly 1.18 million kg was offered at the country’s sole auction centre in Chittagong, and 46% remained unsold. At the previous auction, more than 2 million kg was offered, of which nearly 60% went unsold.
Buyers sought huge discounts to buy end-of-season tea that tends to be of inferior quality, the official said.
Pakistani buyers took part in the auction to buy cheap tea, he added.
The auction season, typically to end-March, has been extended through April.
Bangladeshi buyers have imported tea in bulk from neighbouring India, contributing to a glut in the domestic market and reducing demand at the auction, industry sources said.
Bangladesh’s tea production in 2013 rose 1.6% from a year earlier to a record 63.5 million kg due to favourable weather.
That still fell short of domestic consumption of about 65 million kg. Bangladesh has moved from becoming a net exporter to a net importer of tea as consumption has risen.