Yarn prices soar seeing that virus fear triggers panic buying
Prices of yarn marked a good sharp rise found in the domestic market during the last a month as the coronavirus fear has triggered panic investing in, according to industry insiders.
The widely-consumed 30-carded yarn is currently selling between $2.95 and $3 per kilogramme -- an 11 per cent increase from per month ago, explained Monsoor Ahmed, secretary of the Bangladesh Textile Mills Association.
Yarn prices had been showing a great upward trend since last October due to bigger demand from garment makers, Ahmed said, adding that the virus outbreak is currently fuelling the costs further.
However, the principal textile sector that comprises spinning and weaving isn't affected yet as the source chain remains unscathed.
The garment makers need not worry as the neighborhood textile millers and spinners are ensuring uninterrupted way to obtain yarn and fabrics, Ahmed said.
The costs of yarn increased 15 % over the last a month in the coronavirus fallout, regarding to a letter from Bangladesh Garment Ordering House Association (BGBA).
The BGBA leaders submitted the letter to the textiles ministry and met with the commerce minister last week to discuss the problem.
Since cotton prices didn't increase in the global markets, there is no motive the yarn prices is going up in the neighborhood market, said the letter signed off by BGBA President KI Hossain.
"We will lose our competitiveness in the foreign market segments if the yarn rates rise further as our clients won't give higher prices for our garment products."
The Bangladesh Garment Suppliers and Exporters Association (BGMEA) previous month sought special financial the help of the central bank to stay away from any negative impact of the coronavirus on the garment source chain.
The supply chain of fabrics and additional raw materials has been damaged badly because of the outbreak as Bangladeshi apparel manufacturers source 46 % of their recycleables from China, the BGMEA said in a letter to the Bangladesh Lender.
In fiscal 2018-19, imports from China amounted to $13.63 billion, $5.02 billion of which were textiles.
"Presented the dependence of the garment sector in China because of its raw components and the actual fact that the epidemic might linger, it could prove fatal for the industry as the source chain will be paralysed," the letter reading.
Total imports from China plummeted 21 per cent on January from a year previous, and plunged even more to 37 per cent in the 1st week of February, according to data from the National Board of Earnings and the BGMEA.
From this backdrop, the BGMEA needed support in the kind of disaster assistance fund, credit guarantee scheme and amendment to the back-to-back letter of credit (LCs) rules.
The disaster assistance fund may be extended to factories/exporters to aid unforeseen costs such as for example air freight, sourcing of recycleables and accessories from alternate and more costly options to complete the orders and cost of financing for the extended period, the BGMEA said.
While exporters will negotiate with buyers, banks ought to be ready to extend the credit term by 30-60 times because of late arrival of raw materials and increased charges for the extended period.
"Given the situation that there may be potential delays to recuperate out of this crisis, the central lender may look at a special credit guarantee scheme to inspire commercial banks to ensure that they can continue to support the industry."
Since goods from Chinese suppliers will be delayed, Bangladesh Bank may issue insurance policy directives to the scheduled banks to amend the respective clauses in the back-to-back LCs to help make the obligations to suppliers conditional and justified, in line with the BGMEA letter.
The association also asked its member factories to improve awareness among personnel about the virus and opened a "BGMEA coronavirus control room" at its hq.
