Jute exports slump on costly shipping
The rising shipment of jute and jute goods from Bangladesh has come to a halt owing to higher prices of the raw fibre and unprecedentedly high freight costs.
Jute millers fetched $212 million in exports in the first quarter of the current fiscal year, down 31 per cent year-on-year, data from the Export Promotion Bureau (EPB) showed.
"We are really depressed. Buyers are not placing fresh orders unless purchases are essential," said Mohammad Mahbubur Rahman Patwari, chairman of the Bangladesh Jute Mills Association (BJMA).
Raw jute prices in the local market have remained at an elevated level while container freight cost shot up by nearly 10 times to $18,000-$19,000 because of the global container crisis in the last one year.
The fresh blow for the industry comes several months after export earnings from jute and jute goods hit $1.16 billion in the fiscal year 2020-21, the highest on record, driven by a higher price of raw jute and an increased demand.
Millers say buyers are slashing orders against the backdrop of spiralling prices of the natural fibre, which hit a historic high of more than Tk 5,000 per maund in February this year owing to higher demand for exports and a decline in crop production in the previous season.
And the rising container freight charge worsened the situation for jute mills, which make yarn, twine, bags, sacks and other jute goods for mainly the export markets.
Supported by favourable weather, farmers in Bangladesh annually grow roughly 80 lakh bales of jute over the past five years. The fibre is used mainly for industrial purpose.
Fresh harvest of raw jute has arrived in the market, but the raw jute is selling at Tk 2,500-Tk 3,100 per maund.
Patwari says the prices are still high, and international buyers are switching to alternatives of jute goods.
Jute yarn accounts for two-thirds of export earnings from jute and jute goods. The product is used in carpets, and carpet makers in Turkey are the main buyer for yarns produced in Bangladesh.
"But many buyers are using recyclable cotton for carpets," Patwari said.
Yarn and twine makers were the hardest hit as their export receipts plummeted 40 per cent year-on-year to $127 million in July to September, according to the EPB.
"A number of jute mills have suspended production," Patwari said.
Giridhari Lal Modi, chairman of Uttara Jute Mills, says there has been stockpiling of jute goods in Turkey. "Besides, the cost of shipping is too high."
The situation may improve by November-December, said Patwari.