The New Nation - Internet Edition

Export-oriented knitwear manufacturers have reportedly alleged that an 'informal cartel' of local spinners keeps yarn prices exorbitantly high despite a significant fall in global cotton prices in recent weeks. Spinners raised yarn prices when global cotton prices jumped two months back, but look reluctant to respond to the steep fall in prices seen for a month in international markets. The price of the widely used single carded yarns of 30 counts was raised within a few days to 2.95 US dollars from 2.45 - 2 .50 US dollars per kilogram as raw cotton price soared to 90 dollars per pound in March on speculations of output shortage from around 70 US dollars weeks before.

Though the cotton price came down to 75 US dollars per pound and maintained that level for more than a month, the decline has not yet been reflected in local yarn prices. Knitwear manufacturers allege, the local spinners have formed a cartel and are manipulating yarn prices to make a windfall profit at the cost of the whole industry. As low-cost basic knitwear makers spend more than 50 per cent of their production cost on yarn, its increased price affects the local manufacturers heavily, president of the Bangladesh Knitwear Manufacturers and Exporters Association reportedly said.

The hiked yarn price has rather come as a fresh blow to the industry at a time when global buyers are continuously refusing to raise import prices of finished garment, it was pointed out. The spinners allegedly are making 'undue profit' depriving their customers of the benefits of declining cotton prices. Mentionably, knitwear industry that earned nearly 4 billion US dollars in exports in nine months till March has long been raising concerns about high prices of local yarn. Local spinners supply over 80 per cent of the yarn requirements of knitwear units and the market is protected by European Union rules.