Raw jute prices may stabilise as Bangladesh lifts export ban

Production costs in Bangladesh are 30% lower than in India, making imported jute more viable than the domestically available alternative

The Bangladesh government has lifted the ban on raw jute exports to India, which was in effect since November 3, 2015, as its domestic consumption rose from three million bales (one bale is 180 kg) to five million bales.

“The (Indian) market has not reacted immediately to the development. But, there is hope that this would ensure more availability of raw jute and help stabilise prices,” said Sanjay Kajaria, former chairman of Indian Jute Mills' Association (IJMA) and managing director of Hastings Jute Mill.

Raw jute prices in India are currently at Rs 58,000 a tonne.

It is cheaper to import jute goods from Bangladesh and Nepal as labour cost and production costs are higher in India. The production costs in Bangladesh are cheaper by 30 per cent in comparison to India. Nepal is used as a conduit for third-party illegal imports.

Export of raw jute from Bangladesh to India, which was in the level of 0.9 million bales during 2011-12 and 2012-13 came down to the level of 0.24 million bales in 2013-14, 0.15 million bales in 2014-15 and 0.26 million bales in 2015-16.

In 2014-15, import of jute bags rose 75 per cent in value terms and 79 per cent in volume. Of this, jute sacks went up by 36 per cent, jute yarn by 37 per cent and carpet backing cloth by 27 per cent.

In July 2015, import of raw jute from Bangladesh surged 213 per cent on volume and 274 per cent in value terms over the same month a year ago. Also, import of jute products rose five per cent in quantity and moved up 23 per cent in value terms compared to July 2014.

Cumulative imports of raw jute during April-July 2015 declined by 21 per cent in volume but rose six per cent in value terms over the corresponding period of last fiscal. Likewise, import of jute products in the period declined 26 per cent in quantity but increased by four per cent terms in value terms.

• November 3, 2015: Bangladesh announces temporary ban on raw jute exports
   
• March 28, 2016: Bangladesh lifts ban on raw jute exports
   
• Bangladesh exported 0.9 mn bales of raw jute to India in 2011-12 and 2012-13
   
• Raw jute imports from Bangladesh declined to 0.15 mn bales in 2014-15 and 0.26 mn bales in 2015-16