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Jute takes a hit from Middle-East crisis, rupee slide

Sohel Parvez
Owners of nearly half a dozen jute mills suspended production as export demand plummeted following the depreciation of the Indian rupee and a crisis across the Middle East, industry insiders said yesterday.
To stay afloat, many others had to cut down production, they said.
"We had to shelve production as it became tough to continue in the back-drop of deepening crises in Libya, Egypt and Syria, which led the prices to drop substantially over the past one year," said Kashif Mushtaque Wazid, managing director of Fatima-Alyaf Tala-e Jute Industries Ltd.
Mahmudul Huq, deputy managing director of Janata Jute Mills Ltd, one of the leading exporters of jute products, said the entire Middle East market will be blocked if the US attacks Syria.
The company had to pull back 11 containers of shipment to Syria following advice from buyers—a development which comes at a time when exports to another major market, India, is facing a cut-back due to the falling value of rupee against the dollar.
"The future is bleak," he said, adding that his company had to cut production at two of its nine units, with more cutbacks on way.
Last week, the rupee slumped to a record low of 68.75 to the dollar, to cap a 25 percent fall in value since the start of the year. "Our market for Syria and Iran is closed. And now Indian importers are not taking delivery of old orders, let alone place new orders," Yusuf, also the managing director of Faridpur Jute Fibres Ltd.
"It has been a month now that we could not make any shipment. Buyers in India are offering too low a price to accept," said Gopi Kishan Sureka, chief executive of Fiber 'N Fibre, adding that most jute companies are now running on losses.
Other than the cutback in orders, the depreciation of Indian rupee has created another source of worry for the exporters, he said.
"India is our main competitor in the world market, and the Indian exporters are exploit- ing their currency's fall in value by cutting down the prices for their exports. It is worrying we may lose those markets, where we had been exporting for a long time now."
Yusuf, also a former chairman of Bangladesh Jute Spinners Association (BJSA), echoed Sureka's views, adding that the Indian exporters have got a 30 percent price advantage. Shahidul Karim, secretary of BJSA, quoting the association's chairman Muhammad Shams-uz Zoha, said fresh enquiries have almost come down to nil.
Although exports of jute and jute goods grew by 2.52 percent year-on-year to $80.15 million in July, raw jute, jute yarn and twine, the main export earner of the jute sector, dropped significantly, according to Export Promotion Bureau.