Spinning mill owners want to revise up the price of yarn since the price of their raw material, cotton, has been increasing recently, said sources at the Bangladesh Textile Mills Association (BTMA).
At an emergency meeting on Tuesday, the BTMA decided to hold a meeting with the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) to explain the international market circumstances.
Readymade garment exporters claim local spinning mills have been charging a much higher price for yarn than the global rates, but the yarn manufacturers have repeatedly said they have raised the price of yarn in proportion to market cotton prices.
In August this year, the BTMA, BGMEA and BKMEA decided to revise the price of yarn if it dropped below 85 cents or exceeded $1 per pound.
A pound of cotton traded at $1.05 on 13 October (Bangladesh time 6pm), according to markets.businessinsider.com. Usually yarn manufacturers buy a pound of cotton at around 80-85 cents at this time of the year, said sources.
BTMA President Mohammad Ali Khokon said they will sit with the BGMEA and the BKMEA by next week to discuss the cotton price issue and to revise yarn prices.
He also requested apparel exporters to keep the additional cost of buying yarn in mind and to factor that into their pricing when negotiating with buyers. He said BTMA members will honour the existing proforma invoices (PI) but in the coming days the PIs might include a higher price, which is fully dependent on the future market index.
A proforma invoice is a preliminary bill or invoice used to request payment from a committed buyer, for goods or services before they are supplied.
BKMEA Executive President Mohammad Hatem told The Business Standard, "If the price of cotton increases, the price of yarn has to be revised as per the agreement reached in our previous meeting. But spinning mills have to discuss this with us before raising prices.
"It will be important and useful for us to negotiate with garment buyers, otherwise apparel exporters will be adversely affected."
At Tuesday's meeting, BTMA Director Syed Nurul Islam said, "The price of cotton and other key raw materials for making yarn have been increasing, which has become a major challenge for this sector and this might continue till 2022.
"Freight costs have also increased about 350%, and some raw materials have gone up about 500%, all of which have a ripple effect on yarn prices."
Md Mozaffar Hossain, managing director of SIM Group, said, "We should put pressure on global apparel buyers as the price of cotton is going high. We, textile makers and garment exporters, should hold talks among ourselves every five days to set the price of yarn."
Former BGMEA president Anwar Ul Alam Parvez said, "Prices of everything except garments are increasing. Now it is time to find a solution to protect the interests of all three associations – the BTMA, BGMEA, and BKMEA."
He also suggested calling a meeting of all buyer representatives to explain to them raw material prices and ask for a fair price for our finished products.
In FY21, Bangladesh was the second largest apparel exporter and earned over $31 billion from it.
The country was also the second largest global importer of cotton in the last fiscal year. It imported over 8 million bales of cotton, mainly from African countries.