Textile sector breathing a sigh of relief with the rebound of apparel export orders | The Daily Star
12:00 AM, August 19, 2020 / LAST MODIFIED: 01:59 AM, August 19, 2020

Textile sector breathing a sigh of relief with the rebound of apparel export orders

The sale of yarn and fabrics of export-oriented spinning and weaving mills is on the rise thanks to a higher inflow of work orders from international clothing retailers.

This has put the country's primary textile sector, which incurred losses of more than Tk 20,000 crore for the economic whiplash by the coronavirus pandemic, on the path of a quick recovery although prices remain below expectations, said millers.

Both textile millers and garment exporters say more and more of the production capacity of their factories was coming to use for the higher inflow of work orders from retailers.

On the other hand, normalcy has returned to the supply chain with China, the main sourcing destination for Bangladesh's textile and garment-related raw materials.

As a result, the business of textile production and garment exports are witnessing improvements fast, according to industry insiders.

"We have just completed our marketing for next seasons," said Faisal Samad, vice-president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), adding that the inflow of work orders is also better than that of the previous three months.

A good number of buyers have been reissuing work orders they had previously cancelled and placing new ones as the retailers in the EU and US have opened up their stores.

The shipment of the new work orders will start from November, Samad said.

His views were echoed by A Matin Chowdhury, managing director of Malek Spinning Mills, a leading spinner and garment exporter.

Sales from his spinning mills had increased compared to what was in the last few months but the prices are not what he was expecting.

This is because of cheaper yarn from other countries that have been flooding the domestic markets of late, although there was no such smuggling of yarn over the last few months because of the coronavirus pandemic.

As a result, the sale of fabrics from local mills for the domestic markets had witnessed a surge.

But as normalcy is being restored in business, cheap yarn from neighbouring countries has started pouring in, he said.

American buyers are increasingly placing more work orders, presumably because their sales have increased with the reopening of stores, he said.

A $600 payment to American citizens under an unemployment scheme by the US government has helped to create new demand for goods in their markets.

This is why the sales of clothing items in the US markets have improved a lot. So the shipment of clothing items to the American markets is also increasing a lot from the country, Chowdhury added.

A Narayanganj-based yarn merchant, seeking anonymity, also blamed the invasion of cheap yarn from neighbouring countries for giving rise to challenges at his factory.

Moreover, some unscrupulous traders were selling yarn imported under the bonded warehouse facility in the domestic markets.

"We received better prices from the sales of yarn in January, February and March of this year," the yarn merchant told The Daily Star over the phone.

He went on to urge the National Board of Revenue to monitor the use of bond facilities such that they were not abused.

"The government should also improve patrolling at the bordering areas so that the invasion of cheap yarn is stopped for the sake of the domestic textile industry."

The local entrepreneurs have already invested more than $8 billion in the primary textile sector and have been acting as the main player in supplying raw materials for the export-oriented garment industry by reducing lead time substantially.

Sometimes, the prices of even smuggled clothing items are less than that of the local yarn, which is absurd in business.

The Bangladesh Trade and Tariff Commission should also set out a proper valuation of local and imported clothing items to discourage the smuggling, he added.

Demand has been increasing a lot from the buyers for yarn and fabrics but the prices are not at the satisfactory level, said Mohammad Ali Khokon, president of Bangladesh Textile Mills Association (BTMA), the platform for spinners and weavers.

Some of the mills are now running at 70 per cent capacity, while the others are operating at 65 per cent and some less than 60 per cent as the demand for yarn and fabrics has been increasing.

Before the pandemic, he used to sell yarn worth $55 lakh on an average every month but during the pandemic, the sales from his mill were negligible.

However, with the reopening of the economy, he sold yarn worth $23 lakh last month and another $12 lakh this month.

"Maybe this month's sale will be low, but I am hopeful that the sales will grow from next month as I am receiving a lot of response from my buyers," Khokon added.

The widely consumed 30 carded yarn sold between $2.50 to $2.53 per kilogram in the local markets in July and August, said Monsoor Ahmed, secretary to the BTMA.

Before the pandemic, the same 30 carded yarn had sold between $2.80 to $2.90 per kg in February and March, he said.

Although prices of cotton, the raw material of yarn, has declined in the international markets, local spinners cannot take advantage of this as the cotton they had was imported before the pandemic at 75 cents to 80 cents per pound, Ahmed said.

Currently cotton is selling between 64 cents and 65 cents in the futures markets in New York.

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