Spinners on an expansion spree

The spinning industry in Bangladesh is witnessing massive investment as local entrepreneurs are either expanding their production capacities or setting up new units as the demand for garment raw materials is rising.

Local spinners have a combined capacity to process 13.43 million bales of cotton each year. But due to various drawbacks, they are unable to run at full steam.

As a result, the mills currently manage to make use of 8.5 million bales of cotton annually, shows data from the Bangladesh Textile Mills Association (BTMA), a platform for entrepreneurs from the primary textile sector.

"Just earlier this year, around Tk 1,900 crore was invested in the spinning industry despite the ongoing coronavirus pandemic," said Monsoor Ahmed, chief executive officer of the BTMA.

Three new spinning mills will go into operation within the next two years, while some of the existing millers plan to expand their capacities to meet the growing demand.

As such, the industry will be able to process 16 million bales of cotton within the next two years, Ahmed said.

The addition of the new spinning capacity will raise the investment in the primary textile sector to nearly $11 billion from $10 billion.

Of the investment, 75 per cent is in the spinning segment, while the remaining 25 per cent is divided amongst the weaving, dyeing, finishing and sizing segments.

"We get a lot of queries from the local garment sector for yarn and fabrics, and so BTMA members are investing a lot to increase the production of the raw material," Ahmed said.

Shorter lead-time, improved quality, and private consumption are pushing the domestic demand for yarn and fabrics higher.

For instance, if local garment exporters import yarn and fabrics from countries such as China and India, it will take at least 20 days to bring in the raw materials. In contrast, they can buy the items from the local market instantly.

Besides, most local spinners have export-oriented garment factories. So, they consume the yarn and fabrics.

The demand for yarn and other fabrics in the garment sector is increasing on the back of an increased volume of work orders from international clothing retailers and brands.

Moreover, Bangladesh needs a lot of diverse raw materials as local apparel makers are diversifying their product basket to include denim and artificial fabrics.

"So, the import of yarn and other fabrics is also increasing to meet the demand," Ahmed said.

In 2020, Bangladesh imported $1.32 billion worth of knitted fabrics, $2.76 billion worth of woven fabrics, and $0.10 billion worth of yarn for the local garment industry.

Currently, local spinners can supply 80 per cent of the raw materials required by the knitwear sector and 40 per cent of the woven sector. So, local spinners are trying to expand their footprint in the market.

Jinnat Spinning Mills Ltd (JTML), a concern of DBL Group, is one of the new millers set to go into production.

"We are investing $83 million in JTML, and it will be operational by January 2023," said MA Jabbar, managing director of DBL Group, a major garment exporter.

The new mills will be set up at Sherpur in Moulvibazar with 56,544 spindles to produce 840 rotor drums, 31 tonnes of ring yarn, and seven tonnes of rotor yarn per day.

"Our garment factories will consume all the yarn as we have a lot of work orders from international buyers," Jabbar said.

Currently, DBL Group's Matin Spinning Mills Ltd produces 60 tonnes of yarn per day for its own consumption.

"We can install an additional two million spindle capacity even in the next one year," said Mohammad Ali Khokon, president of the BTMA.

Md Wahid Mia, managing director of Karim Tex Ltd, says he is investing Tk 676 crore to produce 80 tonnes of yarn a day by 2023 to sell to export-oriented garment manufacturers.

Mahin Group is investing nearly Tk 500 crore to produce 60 tonnes of yarn per day by 2023.

The factory's spindle capacity will be 55,000, said Abdullah Al Mahmud Mahin, chairman and managing director of the group.

"The local demand for yarn is robust now," said KM Rezaul Hasanat, chairman and CEO of Viyellatex Group.

He has installed additional spindle capacity to take it to 1.32 lakh spindles from 42,000.

"I am running at full production capacity to meet the demand for yarn," said Hasanat, adding that more work orders were coming from China as well.