Jute exports collapse on costly shipments
The increase in shipments of jute and jute products from Bangladesh came to a halt due to higher raw fiber prices and unprecedented transportation costs.
Jute mills reported $ 212 million in exports in the first quarter of the current fiscal year, down 31 percent year-on-year, according to data from the Export Promotion Bureau (EPB).
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“We are really depressed. Buyers don’t place new orders unless purchasing is essential,” said Mohammad Mahbubur Rahman Patwari, president of the Bangladesh Jute Mills Association (BJMA).
The prices of raw jute in the local market remained at a high level while the cost of freight per container increased nearly 10 times to reach $ 18,000 to $ 19,000 due to the global container crisis during the last year.
The new blow to the industry comes months after export earnings from jute and jute articles hit $ 1.16 billion in fiscal year 2020-21, the highest on record, in due to a higher price of raw jute and increased demand.
Millers say buyers are cutting orders amid soaring prices for natural fiber, which hit an all-time high of over 5,000 Tk per maund in February this year due to higher demand for ‘exports and a drop in agricultural production during the previous season.
And the increased cost of container transport has worsened the situation for jute mills, which manufacture yarn, twine, sacks, sacks and other jute items primarily for export markets.
Supported by favorable weather conditions, farmers in Bangladesh have grown around 80 lakh of jute bales each year for the past five years. The fiber is mainly used for industrial purposes.
A new crop of raw jute has arrived on the market, but raw jute sells for between Tk 2,500 and Tk 3,100 per maund.
Patwari says prices are still high and international buyers are turning to alternatives to jute products.
Jute yarn accounts for two-thirds of export earnings from jute and jute articles. The product is used in carpets and the carpet manufacturers in Turkey are the main buyer of the yarns produced in Bangladesh.
“But many buyers use recyclable cotton for rugs,” Patwari said.
Yarn and twine manufacturers were the hardest hit, with their export earnings falling 40% year-on-year to $ 127 million from July to September, according to the EPB.
“A number of jute mills have suspended production,” Patwari said.
Giridhari Lal Modi, president of Uttara Jute Mills, says there have been stocks of jute products in Turkey. “In addition, the cost of shipping is too high.”
The situation could improve by November-December, Patwari said.