Cotton yarn prices have stopped falling in Bangladesh, in line with the rebound of cotton prices on the international market. The surge of yarn imports is however pressuring domestic spinners with limited room for raising prices.
Cotton yarn prices have stopped mostly falling in Bangladesh although spinners are further lowering their offers here and there.
The rise of cotton prices is forcing yarn producers to stop cutting their prices in order to avoid a sharp decline of their margins.
Domestic spinners had been previously pressured by a surge of low-priced cotton yarn imports into the country.
First, Chinese yarn exporters have more focused on the Bangladeshi market after additional US tariffs have been imposed on their products.
Second, yarn producers are also confronted with unfair competition from foreign yarns which are entering through bonded warehouses.
The yarn imports are benefiting from a duty-free status as far as they are used in production of exported apparel.
They are actually often available on the domestic market, and in direct competition with local producers, as reported by the latest “attaché report” from the US Department of Agriculture (USDA).
The fall of cotton yarn prices in Bangladesh is actually helping apparel exporters in staying competitive after their labor costs have been boosted by the surge of the minimum wage at the end of last year.
Demand for apparel from Bangladesh has significantly climbed in the last year and should further increase in 2019, although at a lower pace.
Whatever the jump of cotton yarn imports, domestic production should further rise and cotton imports will also continue climbing.
Demand is also climbing the value ladder with an increasing need for higher-valued yarns, therefore favoring domestic spinners.
Bangladesh has become the largest cotton importer in the world, reflecting the fast development of its yarn capacities, in line with EU’s rules of origin for getting the duty-free access at European borders.
Source: Emergingtextiles
