Bangladeshi apparel producers have claimed that domestic spinners are capitalising on limits placed on duty-free yarn imports, pushing up their prices and widening the cost differential with Indian supply, at a time when garment makers are already stretched by rising overheads.
The government brought in the controls to shield local mills sitting on piles of unsold yarn. Under the rules, importers bringing in certain yarn counts are obliged to lodge a bank guarantee matching the worth of each shipment.
Clothing makers contend that spinners have seized the opportunity to lift prices, leaving buyers in the sector with scarcely any alternative to purchasing locally at higher cost.
Last week, the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) drew up a side-by-side price comparison of yarn offered by the country’s major mills, which it intends to hand to the relevant ministry.
The comparison indicates that local yarn has become roughly 5–6% costlier since the curbs came into force on September 7.
The BKMEA data shows Bangladeshi yarn carried a premium of about 9% over equivalent Indian product ahead of September.
By October that margin had stretched to almost 19%. Factory owners say prices have kept rising since the chart was compiled.
Separately, some importers are said to be struggling to get shipments released from port even after the cargo has landed.
The measures have also unsettled investors operating in economic zones, whose association has written to the authorities voicing alarm at the restrictions on imports of yarn in the 10–30 count band.
TBH quoted BKMEA Executive President Fazlee Shamim Ehsan as saying that the quoted price for 30-single combed carded yarn, had edged up to $3.80 to $3.90 within seven days in September, against $3.65 in August.
He charged local mills with lifting prices without justification, piling costs onto manufacturers at a moment when overseas buyers refuse to pay more.
Ehsan said the sector was passing through a testing period and that unjustified increases endanger its progress, cautioning that garment production could become uneconomic if the pattern persisted. He asked who would purchase the spinners’ output if the apparel industry failed to survive.
Spinners dismiss claims
Domestic mill owners have dismissed the accusations as broad-brush and unsupported.
Muhammad Ziaur Rahman, additional secretary general of the Bangladesh Textile Mills Association (BTMA), called on garment makers to back up their assertions by naming which mills had raised prices and by what amount.
He noted that pro forma invoices (PIs), which serve in early price talks, cannot prove real transaction prices, since quotes may shift before deals are closed.
He said buyers should instead produce evidence of the prices at which letters of credit were opened, and alleged that certain complaints rested on doctored PIs.
Ziaur conceded that some rise might be warranted. Certain mills that had earlier sold at a loss, he explained, are no longer prepared to do so. International cotton prices, he added, have climbed by about $0.20 per kg across the past four months.
Image courtesy: BaoDau
