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Local cotton price hike may hit RMG exports

RMG industries see negative growth

Published : 27 Dec 2021 10:44 PM | Updated : 28 Dec 2021 03:19 PM

Despite a positive trend in the export of ready-made garments, recent high prices of cotton, the main element of the garment industry, stands in the way of steady growth.

The country's garment industry export growth has surpassed all previous records following the improved situation of Covid-19. However, the high price crisis may hit the industry hard.

Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President Faruque Hassan said that the price of yarn and cloth produced in the factories of the country should not exceed the import price otherwise the readymade garments sector is likely to face stiff competition.  

Even six-seven months ago, the price of a pound of cotton in the international market was 70 to 76 cents. At present, it has exceeded USD 1.20 which is the highest in the last decade.

Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) First Vice President Mohammad Hatem told Bangladesh Post that the price of yarn was $2.5 per pound during the August-September period last year, and now it has increased to $4.5.

“We have already started importing yarn. The imported yarn costs $2.60 per pound whereas the local yarn costs $3.80 to $4. Therefore, we are saving a lot of money by ordering yarns in large quantities,” he said.       

He mentioned that the country’s yarn and textile mills meet 80-85 per cent demand in the net garment sector. 

He said that the local yarn and textile mills supply 80 to 85 per cent of the net fabrics in the country’s readymade garments sector and 35 percent to 40 percent of the woven garments as a linkage industry. Yarn mills owners have taken this opportunity to increase the yarn price which is unexpected.

It has been alleged that the textile entrepreneurs are making huge profits on the pretext of the international cotton market. However, textile entrepreneurs said that the price has also gone up due to the increase in demand for cotton.  

The Bangladesh Cotton Association (BCA) said that if the price of cotton goes up, the price of yarn will also go up. People in the garment industry have to accept that. 

BCA President Mohammad Ayub said, "The unrest over the high price of cotton in the international market does not seem to be over soon. The high price of cotton will increase the price of yarn which will also affect the price of the cloth produced from that yarn.” 

He urged the RMG owners to take this into consideration. If they import yarn directly from the international market, arguing that the price is high, it will have a negative impact on the yarn and weaving industry of the country. 

Talking to the Bangladesh Post, BGMEA First Vice-President Syed Nazrul Islam said, “Although the prices of local yarns have increased, we are still prioritizing local yarns over imported ones. Hopefully, the prices will come down soon.”

According to BTMA, there are 1,521 textile factories in the country. Of these, 433 are yarn mills, 827 are textile mills and 251 are dyeing and printing mills. The spinning mill requires about eight million bales of fiber per year, most of which is imported.

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