The textile industry is experiencing a yarn crisis due to a shortage of production. As yarn manufacturers began exporting to China, where they got higher-priced orders, the product in the local market declined. Yarn prices have risen by 20-30% in the previous two months.
According to industry insiders, the promising sector that gave new hope for export in the previous fiscal year by attracting overseas buyers with top-notch products at competitive prices and on-time shipment is now losing orders because buyers are unwilling to increase product prices in line with the surging yarn price. As per exporters of Bangladesh, cotton price increases in foreign futures markets caused a 40% increase in yarn prices between December and June.
In this condition, the Bangladesh Terry Towel and Linen Manufacturers and Exporters Association (BTTLMEA), an organization of home textile entrepreneurs, has asked exporters who do not have bond licenses to import yarn from overseas at a reduced rate. There are currently around 50 firms in the nation that make household textile items such as Terry towels. Only around five or six of them have bonding licenses. The other businesses are medium-sized and have lesser investments. They rely heavily on locally made yarn. If these firms import yarn straight from outside, they must pay a tariff of around 37%. Bangladeshi spinners and millers claim to have stockpiled cotton while worldwide prices were low. Cotton millers also claimed they stockpiled up during the pandemic since costs were low. Following the US ban on Chinese cotton in January, the yarn market recovered and soared. This, in our opinion, was an intelligent move as to keeping up with their position in the global market. Or else, if Bangladesh lags in yarn production and distribution, the potential clients of Bangladesh will lean towards Pakistan.
According to Terry Towel Manufacturers, the local spinning mill owners have taken advantage of this situation and created a fake scenario of crisis in front of them, resulting in a price hike. In recent years, disagreements between spinning mill owners and Home Textile Mill owners have grown over the problem.
In light of this, a recent meeting attended by all parties resolved that yarn prices would not rise further. The meeting also decided to create a committee comprised of members from all stakeholders to determine the cost of yarn in relation to cotton. Owners of relatively modest home textile mills, on the other hand, allege that yarn is no longer accessible in the market after the meeting determined that the price would not rise.
Written by Afnan Ibrahim
