The U.S. synthetic carpet industry is to blame for a sharp fall in demand for jute carpet backing cloth, Indian and Bangladeshi exporters asserted.
A sustained anti-jute advertising campaign was started in the United States in March by synthetic manufacturers, which also have started offering heavy price discounts. This has hit demand for jute CBC, according to a statement by the CBC exporters.Synthetics producers are reportedly offering discounts ranging from 4 cents to 6 cents a yard below the list price of around 72 cents. While a source at Amoco Corp., who said that the company produces about half of the synthetic backing in the United States, confirmed the list price, he would not value off-list discounting, suggesting that jute is sold way below synthetics prices.
The jute producers say there is little hope of a revival in demand because the U.S. construction industry is in the dumps, according to a Calcutta source. The Indians acknowledge that synthetic producers have their own problems with large inventories built up because of a slump in demand caused by the sluggish growth in construction.
The U.S. Jute CBC Council has appealed to the Federal Trade Commission against the synthetics producers' advertisements and the American jute association is now reported planning its own counter-campaign.
Jute CBC of 5.5 ounces is available ex-Savannah at 63 cents to 64 cents a yard, but margins are too small to allow jute merchants to aggressively market products by personal visits to carpet mills, the Indian industry maintains.
The United States in 1987 imported 133,077 metric tons of jute goods valued at $86.2 million, of which India's share was 47,595 tons worth $31.4 million and Bangladesh's 76,402 tons valued at $48.9 million.
Of America's total CBC imports last year, India's share was 16,803 tons valued at $13.2 million and Bangladesh's 30,039 tons worth $23.4 million, according to industry figures in India.
In the first quarter of this year, CBC exports to the U.S. East Coast from Calcutta plunged 80 percent to 2,000 rolls compared with 13,000 rolls in the corresponding period of last year.
Exporters are hoping buyers will place orders next month for delivery beginning in July and August, but they fear CBC exports to the United States this year will be down at least 15 percent from last.