Local yarn manufacturers have decided to check unusual price hikes of yarn in the domestic market and committed not to increase yarn prices quoted in the proforma invoices (PI) issued on August 10 at the latest.
The assurance came after the leaders of Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) and Bangladesh Terry Towel & Linen Manufacturers & Exporters Association (BTTLMEA) held a meeting with Bangladesh Textile Mills Association (BTMA) last night (10 August).
BGMEA President Faruque Hassan, BKMEA President A.K.M. Salim Osman, MP, First Vice President Mohammad Hatem, BTTLMEA Chairman M Shahadat Hossain and BTMA President Mohammad Ali Khokon took part in the meeting. Former BGMEA President Kutubuddin Ahmed, former FBCCI President A.K. Azad, former BTMA Presidents A. Matin Chowdhury and Tapan Chowdhury were also present at the meeting.
BTMA President Mohammad Ali Khokon also assured that yarn manufacturers would keep the proforma invoice (PI) valid for 15 days which they were keeping in a very short time. Such a short time limit was not sufficient for taking business from buyers. PI is an estimated invoice sent by a seller to a buyer in advance of a shipment or delivery of goods.
They also agreed to hold another meeting next Monday to have a discussion over reducing yarn price.
BGMEA President Faruque Hassan demanded that 30s yarn price goes down immediately keeping it consistent with the international market to save the industry and keep the industry’s competitiveness and survive in this crucial time of business.
It was decided in the meeting that an arbitration cell will be revived. The cell will consist of BGMEA, BKMEA, BTTLMEA, and BTMA representatives to resolve all PI-related and other issues on a fortnightly basis.
Earlier, the apparel exporters expressed their worry over the continuous yarn price hike in the local market. The unusual hike in yarn price is impacting the competitiveness of the RMG industry which is already passing a difficult time due to the increase in production cost and fall in apparel prices.
Retail sales have grown sharply in Europe and the US as stores are opening following mass vaccination. As a result, a lot of work orders are coming to Bangladesh. But the garment exporters cannot take all of the orders due to an unusual increase in yarn prices in the domestic market. Orders would be shifted to other competing countries if Bangladeshi exporters cannot take them.
Cotton is the main feedstock of the export-oriented garment export industry in Bangladesh as 75% of the total exported garments are produced from cotton. Bangladesh is the second-largest cotton importer in the world. Hence, continuous price hike in such a crucial raw material like cotton/yarn is having serious impacts on the garment industry.
The garment factories, which were hit hard due to order cancellation, discounts, fall in prices due to the pandemic, are still struggling to survive and recover from the losses and shocks created by the pandemic. The cost has increased for running factories by maintaining health protocols while apparel prices have fallen by 3.76%.
Moreover, production cost has gone up by 30.11% in the last eight years due to rise in wages, utility service charges – gas, electricity. Transportation cost has doubled recently. Besides, wages have increased on average 7.5 percent at the beginning of the current year.
Given the present situation, the decision of not to increase yarn price is crucial to retain competitiveness and save the RMG industry.