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Bangladesh - June 16, 2021

Rising of raw material price hits garment accessory makers

Industry Desk: Garment accessory and packaging manufacturers hit hard as raw material prices rises steeply while the COVID-19 pandemic has put the overall apparel and textile and its sub-sectors under immense difficulties.
With the pandemic choking the global supply chain, prices of raw materials used by the backward linkage industry have skyrocketed in the international market. A sudden increase in demand following the complete restarting of manufacturing hubs in China and India after the COVID-led shutdown has caused a sudden hike in prices of necessary raw materials such as polymer, yarn, Kraft paper and chemicals reaching between 40% to 80%.
Since last January, accessories and packaging raw material prices have started rising. Between, January to May, yarn prices increased to $3.5 from $2.5 per kg, polymer used to make poly bags and hangers has jumped to $1,600 from $960 per ton, and Kraft paper to $1,400 from $880 per ton.
While, the ink and chemicals prices increased by $9-$12 and $90 per kg from $7 and $55 respectively.
AKM Mustafa Selim, owner of SAMS Packaging, told a leading daily, “The Kraft paper we used to import at $800 per ton now costs $1,400. At the same time, banks are also not giving us additional loans. We are barely keeping our factory running to retain the workers.”
Accessories and packaging makers are now losing money due to this precarious situation. The Bangladesh Garments Accessories and Packaging Manufacturers and Exporters Association (BGAPMEA) said accessories and packaging factories are in the SME category, but maximum of them have not received loans from the Tk20,000crore stimulus package announced by the government. Locally produced garment accessories and packaging items meet 95% of the demand of the RMG industry. When the first wave hit in March last year, the accessories and packaging factories had to shut down.

While the RMG export growth is regaining the accessories sector is unable to benefit due to a sharp rise in raw material prices.

Accessory owners say they are losing money by importing at a higher rate but not getting a fair price at home. Lack of enough capital is also forcing them to import lesser amounts of the now costlier raw materials and lose production.

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