But industry insiders said the price decreases due to imports were quite small and that prices remained much higher than those of 2020
Yarn imports have boosted supply and brought down local prices, ending a months-long tangle in the apparels market.
For the last couple of months, textile millers and apparel exporters had been locked in a battle over rising yarn prices, with millers claiming that high prices were tethered to a surge in demand.
RMG manufacturers have responded by importing yarn.
Industry insiders said the price decreases due to imports were quite small. They said prices remained much higher than those of 2020.
At the beginning of this year, 30-count yarn, used in the manufacture of apparel products, sold at $4.35-$4.40 per kg. Prices have now fallen to $4.10-$4.15 per kg.
In December last year, 30-count yarn sold for $3 per kg.
Prices are likely to continue to fall as September to December is cotton harvest season and cotton-producing countries have had good yields this time, apparel industry insiders said.
They also said that the price of yarn in India is also on the decline and is selling for $3.60 per kg — down from $3.80 per kg a few months earlier.
Ironing out wrinkles
Previously, apparel and terry towel exporters had alleged that spinning millers were to blame for increases in yarn prices.
Textile millers denied the allegations and claimed that they were not hiking prices intentionally.
They said the surge in sales of apparel products in Europe and the US had caused an increase in orders with Bangladeshi factories, driving up demand for yarn.
After several meetings, the textile millers and apparel manufacturers agreed to fix the yarn prices.
“Although we fixed the price of yarn at $4.20 per kg at the joint meeting, we had to buy it at $4.25-$4.30 per kg. It is currently selling at $4.10-$4.15, which means it has fallen by a bit,” said Mohammad Hatem, vice president of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA).
Several apparel manufacturers are importing yarn from the international market mainly to overcome the stresses caused by the yarn price hike, he added.
Hatem also said that the current price of yarn in India is $3.60 per kg, so it is profitable for the manufacturers to import yarn from India or other international sources.
“Though the government provides a 4% incentive on export apparel items which use yarn produced from domestic sources, importing the yarn is still profitable,” he added.
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There is a big difference between the price of yarn in the local and international markets, owing to which importers are still benefited even if they do not get the 4% incentives, Hatem further said.
“Moreover, taking this incentive is often time consuming and the exporters have to face harassment. So, the apparel manufacturers are trying to buy yarn from the international market and many are applying for LCs from Indonesia, China and even Vietnam,” he added.
Md Fazlul Hoque, vice president of the Bangladesh Textile Mills Association (BTMA), told Dhaka Tribune that the local supply of yarn has also increased in the market and so the prices have come down.
However, he said, it is doubtful how long the situation will sustain as the price of cotton in the international market is at its highest since 2011 as natural calamities in India have wreaked havoc on the global cotton supply.
“This will also affect the market of our country. We should take action now to prepare for the impact the rise in cotton prices could have on the country's yarn market,” he also said.
According to the BTMA, domestic spinning mills supply 80% of the yarn to export-oriented knitwear factories.