Yarn prices go up on rising RMG orders for spring

Yarn prices have been increasing in the domestic market over the last two weeks as demand from garment exporters is rising amid a hike in work orders from international clothing retailers and brands thanks to easing inflation in the West.

With customers increasing clothes purchases, retailers and brands are being able to clear out old stocks accumulating for a slowdown in sales amid the severe fallouts of Covid-19 and the Russia-Ukraine war.

Recovering from those lulls, garment exporters hope for a good rebound in work orders from major export destinations. Hope lies in the fact that countries like Bangladesh are being chosen by buyers as an alternative to China.

The work orders being currently placed are for spring next year, meaning around March. Shipping of these clothes will begin in January.

The widely consumed 30 carded yarn, used for less expensive, more rustic projects, has been selling between $3.50 and $3.60 per kilogramme (kg) whereas it was $2.90 to $3.10 a month ago, said industry insiders.

With customers increasing clothes purchases, retailers and brands are being able to clear out old stocks accumulating for a slowdown in sales amid fallouts of Covid-19 and war.

Similarly, 30 combed yarn, which is used for high-quality woven fabrics and garments, is selling between $4 and $4.05 per kg whereas it was $3.50 to $3.60 a month ago.

The yarn prices are rising for the large volume of work orders currently coming in, said Faruque Hassan, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).

However, Christmas shipments beginning in October might not fetch that much as stores still have unsold stocks, he said.

The post-pandemic recovery had led exporters to increasing their production by 25 percent, which is now coming to use, he added.

Local garment exporters prefer using locally-made yarn instead of imported ones to maintain the current lead times of 45 days to 60 days demanded by buyers, whereas earlier it was 90 days to 120 days, he said.

A good volume of work orders came to Bangladesh for next spring and demand for yarn has also started rising, said Razeeb Haider, managing director at Outpace Spinning Mills Ltd.

Whether this demand will prevail remains to be seen because there have been instances where it later went down, he said.

Sale of yarn for both export-oriented and domestic markets have started increasing, said Khorshed Alam, chairman of Little Group, which also produces yarn for the domestic market.

Demand has increased also for improvements in power supply in major weaving areas using electricity-run looms like in Narsingdi, Narayanganj and Sirajganj, he said.

Demand rose for old yarn stocks being sold off, said Monsoor Ahmed, chief executive officer of the Bangladesh Textile Mills Association (BTMA), the platform for primary textile millers.

But most spinning mills have been running at 50 percent to 60 percent capacity due to gas supply shortages at industrial units, he said.

Improvement in sales of yarn is still slow, said BTMA President Mohammad Ali Khokon.