22pc rise in yarn price to hit knitwear exports
Fazlul Haque, president of Bangladesh Knitwear Manufacturers & Exporters Association, speaks at a press conference in Dhaka yesterday. He says it will be very difficult to maintain the knitwear sector's growth due to the increase in yarn prices. Photo: STAR
Prices of cotton yarn have increased by 20-22 percent in the local market as compared to Indian market, posing a threat to the projected growth of knitwear exports.
The commonly used yarn is selling at between US$ 2.85 and US$ 2.95 per kg in the local market, Bangladesh Knitwear Manufacturers & Exporters Association (BKMEA) said yesterday.
Yarn is the main raw material for knitwear manufacturing that shares around 60 percent of export value, while local spinners supply 75-80 percent of the demand. The knitwear sector alone earned US$ 4.5 billion in 2006-07 fiscal year.
BKMEA, a trade body for the single-largest export-earning sector, has expressed concerns over the price hike of the main raw material.
“It will be very difficult for us to maintain the sector's growth due to the increase in yarn prices,” BKMEA President Fazlul Haque said at a press conference in Dhaka.
Despite all setbacks in the early months of the current fiscal year, knitwear exports earned US$ 2 billion in the first five months (July-November), which is more than one-third of the fiscal year's total target of US$ 5.5 billion for the sector.
“We hope, the growth in December-January will be even better, and we're confident the earnings will cross at least the US$ 5 billion benchmark by the end of the fiscal, if not achieve the estimated target,” Huq said.
The yearly target could also be achieved unless hit by the increased yarn price and any massive unforeseen calamity, he added.
The trade body urged the government to take necessary steps to reduce the inflated price and make it internationally competitive -- be it through easing the complex procedure to import yarn through Benapole port or through other means.
They specially demanded removal of complexities at the Land Customs Station. It will help reduce the local price as well as meet the rising yarn demand by the sector as local spinners are struggling to keep pace with around 20 percent growth of knitwear.
Huq said the local knitwear exporters were under price pressure in international market due to withdrawal of EU restriction on Chinese exports from January 1, 2008. “The increased yarn price will only enhance the pressure,” he added.
Replying to a question, the BKMEA president said there is still no adverse impact of freeing the EU market for China, but the price pressure is very much likely.
Asked about the reason for yarn price hike, he said: “A vested group has increased the price intentionally.”
Comments