Cotton import to reach record high
The stage is set for Bangladesh's cotton imports to cross the 9 million bales mark this year for the first time despite the pandemic's severe fallout in the global supply chain because of a sudden rise in demand for yarn and fabrics from local garment exporters.
In the 2021 calendar year, Bangladesh imported 8.5 million bales of cotton spending more than $3 billion. One bale equals 480 pounds or 218 kilogrammes (kg).
As export of Bangladeshi garment items has risen significantly with the reopening of global economies, cotton imports will surely surge.
Between July and December, the first six months of the current fiscal year, garment export grew by 28.02 per cent year-on-year to $19.90 billion.
Of the amount, $11.16 billion came from knitwear, which witnessed a 30.91 per cent rise year-on-year. The remaining $8.73 billion came from woven, which is also a 24.50 per cent rise year-on-year.
"The upward trend of garment export will continue up to June this year as we booked a large volume of work orders," said Faruque Hassan, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), last week.
"We have already made payments of the letters of credit for importing the cotton," said Mohammad Ali Khokon, president of Bangladesh Textile Mills Association (BTMA), the platform of the primary textile sector and cotton millers.
"We are expecting a rush in import of cotton in March and April this year and again a chaos in the port because of congestion," he said.
Khokon reiterated complaints that vessels of international shipping lines were reluctant to come to the country's premier Chattogram port because of long turnaround times due to congestion and a shortage of containers.
The BTMA president was talking to a group of journalists at his association office in Dhaka to share the current situation of the textile industry, citing the growing demand for yarn and fabrics.
Khokon also said currently the local spinners can meet 90 per cent of the knitwear sector's demand for raw materials but only 40 per cent of that of the woven sector.
As a result, some 6 billion out of the required 10 billion metres of fabrics are imported to meet the demand of the local woven garment sector at a cost of $2.30 per metre.
"So the local millers have either been expanding or investing afresh in the primary textile sector, particularly in manmade fibre and spinning mills, to meet the growing demand of fibre and yarn," said Khokon.
Some Tk 600 crore was invested in the spinning sector to set up 26 new mills last year, he said.
The government should facilitate the import of manmade fibres, as it does in the case of cotton import, because the country does not produce cotton and manmade fibres, he said.
In the next two years, some 2.5 million spindles would be added to the existing 14 million spindles in the spinning sector with an investment of $2.5 billion, he said.
He said the price of the widely consumed 30 carded yarn had increased to $4.71 per kg in December last year.
Millers fixed the price at $.4.20 per kg in September last year to stop a rise in prices following a request made by the local garment exporters.
The price was increased mainly because of the price of cotton per pound going past $1in international markets, lower production of yarn due to gas crisis and abnormal hike in freight charges.
In August, the millers and garment exporters agreed that the price of 30 carded yarn will not cross $4.20 per kg in the local market if the cotton price remains between $0.85 per pound and $1.0 per pound.
However, the cotton price crossed this limit and the yarn price was hiked in the local markets, he added.
Khonon demanded that the government raise the ceiling for loan from an Export Development Fund to $40 million per borrower from the $30 million at present.