Jute prices to stabilize in India with Bangladesh lifting export ban

With Bangladesh lifting jute export ban its prices in domestic market likely stabilize as per Indian traders prefer jute import from Nepal and Bangladesh as production costs of jute in two countries lower than in India. Production costs in Bangladesh are cheaper than those in India by 30 per cent. While, Nepal is used as a conduit for third party illegal imports.

The Bangladesh government has announced the lifting of ban on raw jute exports with effect from March 28 this year. The world’s leading jute producer had imposed a ban on jute exports on November 3, 2015 as its domestic consumption shot up from 3-3.5 million bales to 5-5.5 million bales. Besides, an unusual hike in raw jute prices had spurred the Bangladesh government to announce a temporary ban on exports.

Raw jute prices were hovering around Rs 58,000 a tonne currently in the domestic market. Export of raw jute from Bangladesh to India, which was at the level of 0.9 million bales (one bale is 180 kg) 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 during 2015-16 jute year.

In 2014-15, import of jute bags surged by 75 percent on value terms and 79 percent by volume terms. Of this, jute sacks went up by 36 percent, jute yarn by 37 percent and CBC (carpet backing cloth) by 27 percent.

In July 2015, import of raw jute from Bangladesh surged by 213 percent on volume and 274 per cent in value terms over the same month of last fiscal .

Also, import of jute products rose by five percent in quantity and moved up by 23 percent in value terms compared to July 2014.

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

According to Sanjay Kajaria, former chairman of Indian Jute Mills’ Association (IJMA) and managing director, Hastings Jute Mill, the market has not reacted immediately to the development of Bangladesh lifting ban on its raw jute exports. There is an undertone of hope that the lift in export ban would ensure more availability of raw jute and help stabilize prices.