Falling cotton prices can’t lift apparel makers’ spirits

International cotton prices fell significantly, but did little to cheer local spinners and garment manufacturers suffering from lower orders from international retailers and brands.

The price of cotton fell to $1.01 to $1.04 a pound in international futures markets yesterday, falling from $1.20 to $1.30 in May and June.

For all the latest news, follow the Daily Star’s Google News channel.

This resulted from a decline in demand for clothing items in major export destinations like Europe due to high inflation resulting from the Russian-Ukrainian war.

Since Bangladesh is a net importer of cotton, local spinning mills and garment manufacturers should have been pleased with the lower prices for the widely used white fiber. But the scenario is the opposite.

Millers and spinners are unhappy as their old stocks of yarn made from more expensive cotton have remained unsold in their warehouses.

Unsold stocks of yarn from 300 mills already stand at 6 lakh tons, said Mohammad Ali Khokon, chairman of the Bangladesh Textile Mills Association (BTMA).

Falling orders for apparel items from international retailers and brands have affected the price of cotton in world markets

Since the inventory yarn was made from an expensive cotton, the spinners cannot sell these at low prices. As a result, yarn production was also reduced in spinning mills, which also affected the import of cotton.

“If the price of a kilogram of yarn is set at at least $4.50 in local markets, the total value of unsold yarn in mills is $2.70 billion,” Khokon said.

Weak inflow of orders for apparel items from international retailers and brands has affected the price of cotton in international markets, he said.

Thus, millers and importers are not very interested in importing cotton currently due to stocks of unsold yarn, he added.

At the same time, local spinners, mills and importers may miss out on lower cotton prices in international markets due to unsold stocks of yarn at mills, Khokon said.

“If the price of cotton goes down, we will be more competitive in international markets,” said Md Shahidullah Azim, vice president of the Bangladesh Garment Manufacturers and Exporters Association (BTMA).

However, this time, garment makers are not happy even with falling cotton prices as retailers and international brands suspend orders, he said.

Azim said it would take a few months for normalcy to return to global fashion markets as double-digit inflation in Europe, Bangladesh’s main export destination, is having a severe impact on consumers.

No fluctuations in cotton prices are expected at the moment, said Mohammad Hatem, executive chairman of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), a platform for knitters and the biggest consumers of cotton in local markets.

“We want a stable cotton market for a few months,” he said.

Because if cotton prices drop now, international retailers and brands will negotiate again to lower clothing prices, a pressure buyers still put on local manufacturers, Hatem said.

Additionally, the influx of work orders is still weak from international retailers and brands as demand has plummeted, which has also created a large inventory of unsold items in the western world, he said. declared.

“We may negotiate prices with buyers in the near future with the downward trend of cotton prices in the international market, if this continues for a long time,” Hatem said.

Monsoor Ahmed, additional director of BTMA, said the gas crisis was a major challenge for textile mills as they cannot operate their factories at full capacity.

The yarn storage has added new woes amid the perennial low gas pressure scenario, which has severely affected the sector, he said.

Ahmed said textile mills and owners of export-oriented industries needed to hold a meeting with senior government officials today on the gas crisis to find a solution as exports were being affected.

Michael O. Stutler