Buying orders bullish, prices low

RMG buying orders are bullish after overcoming the Covid-19 epidemic, though the prices offered are a bit low. Most of the buyers want to pay less than usual for all types of apparels.

However, some traders say that in order to attract buyers in this crisis, many people are reducing the price of fabric on their own.

RMG producers say the situation is slowly returning to normalcy in Europe and America after the Corona disaster. As a result, garment factories are getting orders regularly from buyers. However, buyers are offering much lower prices for clothes than the usual. Thus, even if a garment factory starts operation the profit register will show a downward trend. In many cases, the losses have to be incurred.

It is learned that Swedish buyer H&M cancelled most of their orders during the lockdown from March to May this year. Now they are offering lower prices than before when placing those orders again. At present, all other buyers are also placing orders. However, they want to have their products at 5-15 percent lower price than before. In some cases, the cost is much lower than the cost of production.

In such a situation, the manufacturers are being forced to accept the purchase orders thinking of their workers’ livelihood during the epidemic said the garment exporters.

According to the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), orders from readymade garment exporters have declined by 35 percent of their production capacity for the August-December period and an average of 14 percent in price trends.

BGMEA vice-president Arshad Jamal Dipu said that garment manufacturers consider October to February as the peak season. Factory workload is usually low from August to September due to scarcity of orders. However, several top clothing brands have already announced that they will place new orders with apparel suppliers during the epidemic. Rate of order bookings will be better by September if the global epidemic situation improves, he said.

Denim exporters, meanwhile, have about 50 to 60 percent of their production capacity in August and September, according to sources. A top official of Shasha Denim said they had forecast a 15 percent growth in the just-concluded fiscal year, but their forecast took a U-turn as a result of the epidemic.

He said there are almost the same number of orders as in the last financial year. However, this time the next two quarters are less likely to see any growth. They hope that their business will return to a positive trend from the third quarter of the current financial year if the epidemic situation improves.

Mohammad Hatem, Managing Director of MB Knit Fashion Limited and First Vice-President of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), said that he had booked an order for 3.5 lakh units of T-shirts from a US buyer for just 1.22 dollars per unit. Despite having 100 percent production capacity, BKMEA has received only 30 percent orders till October.

According to denim textile sources, inequitable competition among exporters to reduce prices is one of the reasons for low prices. Buyers are likely to call everyone who looks appropriate even if there are only a few.

In this situation, they demanded to fix the minimum price on the basis of different categories of products during the epidemic. India and Cambodia have already set minimum prices for their products, they said.

The current situation is affecting everyone from retailers to suppliers, said a director of Denim Garments Exporters. They agreed to cut down 0.80 dollars per item which was 6 dollars per item in normal time. In consequence, they have to put pressure on their fabric suppliers to reduce the cost by 0.10- 0.15 dollar per yard and other accessory suppliers have to be persuaded in the same manner.

As per the agreement signed in 2018, buyers were committed to raising commodity prices as garment workers' wages were increased by 51 percent. So the factory owners hoped that the buyers would pay fair price as agreed. But because of Corona, all reckonings have changed. The country's garment exporters are facing losses as buyers are not paying a fair price.