Raw material supply eases, but export markets worsen due to coronavirus

The global supply chain, disrupted by the coronavirus outbreak since January, will be restored in the next two to three weeks as China slowly gets ready to supply the world with raw material and machineries, hope Bangladeshi exporters.

However, the businesses' concerns have now shifted from supply chain distribution to Bangladesh's major export markets – the Europe and the US, many of which got locked down after the outbreak which was characterised as a pandemic by the World Health Organization.

European consumers are now in home quarantine. Shops remain empty despite offering hefty discounts, as people are not interested in shopping, according to some suppliers in Bangladesh.

"Still, it is a good news for us that according to Reuters, over 95 percent of large Chinese firms outside of Hubei have resumed work," said Abdul Kader Khan, president of Bangladesh Garments Accessories and Packaging Manufacturers and Exporters Association.

"Last week, I received shipment documents of one consignment of raw material from Ningbo, a major port and industrial hub in east China's Zhejiang province," said Khan, who also serves as the managing director of Khan Accessories and Packaging Company.

He is optimistic that those raw material will arrive at the Chattogram port within the next two-three days. Another consignment loaded with raw material for sewing thread will arrive at Chattogram port by March 24, he said.Seeking anonymity, a senior official of Union Group said the company is importing yarn and chemicals from China. The company's raw material sourcing chain has finally begun operating again since the deadly coronavirus outbreak began in China.

"A consignment of yarn has been delayed by a week, but other consignments are proceeding on schedule," he added.

Inamul Haq Khan, managing director of Ananta Garments, also said he has information indicating that China is recovering very quickly.

"By the second week of the next month, we will be able to get uninterrupted raw material shipments from China," he told The Business Standard.

Like other businessmen, Inamul is also concerned over the export destinations that are already facing the coronavirus outbreak. 

"Some of the brands there have asked us to halt our production for four to eight weeks," he said, adding, "One of my buyers in the US has readjusted his orders, and my export shipment to China also remains halted for over a month."

Commenting on the situation, Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President Rubana Huq said, "We are now more worried about the export of our products than sourcing the raw material. 

"On Saturday, the BGMEA conducted a meeting with the bankers' association seeking their opinion on overcoming the current situation."

The BGMEA president said they will meet with the finance minister and principal secretary at the prime minister's office as soon as possible to find a way out the upcoming liquidity crisis.

Bangladesh has around 60 percent dependency on China for all raw material. 

Of the $34 billion worth of garments Bangladesh exported in 2018-19 fiscal year, over 60 percent were shipped to European nations. The next biggest buyer – the US – is also facing the menace of the virus, which has prompted the government to declare emergency in some states.