Lower cotton prices could boost ready-to-wear orders

As the price of yarn drops in local markets, garment exporters hope to supply goods at competitive prices, which will lead to increased work orders in the coming months. Photo: Amran Hossain

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As the price of yarn drops in local markets, garment exporters hope to supply goods at competitive prices, which will lead to increased work orders in the coming months. Photo: Amran Hossain

Local ready-to-wear exporters expect a strong rebound in the influx of work orders from December as cotton prices have started to decline in international markets.

With the price of yarn also falling in local markets, local suppliers hope to supply goods at competitive prices.

On June 28, cotton was trading between 92 cents and $1.09 a pound in the futures markets. In contrast, it was between $1.31 and $1.32 last month.

High market prices for cotton and yarn, which impact the cost of production at the factory level, had previously prompted many international retailers to suspend large chunks of orders.

High cotton and yarn prices had previously prompted many retailers to suspend large chunks of work orders

When local manufacturers are able to supply clothing items at competitive prices to reduce yarn costs, buyers will also place large volumes of orders again, said Faruque Hassan, president of the Association of Manufacturers and Exporters of Bangladeshi clothes.

If the current downward trend in international cotton prices continues over the next few months, a major impact could be seen on local yarn sales from December, said A Matin Chowdhury, Managing Director of Malek Spinning Mills, a major spinner and importer of cotton.

“Yarn prices have started to decline in local markets over the past two months, mainly due to a lower volume of orders placed by international retailers and brands,” said Mohammad Hatem, Executive Chairman of the Bangladesh Knitwear Manufacturers and Exporters Association.

The drop in the number of work orders has led to a drop in demand for yarn, he said.

The widely consumed carded 30 yarn sold for between $4.45 and $4.60 per kilogram yesterday. In February and March, it fluctuated between $5.25 and $5.30.

Hatem, however, said lower cotton prices may not prevail in international markets once China starts buying cotton in bulk.

Mohammad Ali Khokon, chairman of the Bangladesh Textile Mills Association, said local spinners had already bought up all the cotton they would use until October at higher prices.

Thus, the impact of lower cotton prices may be felt in local markets from December, he said.

Michael O. Stutler