November 26, 2020: Country’s cotton import witnessed a drastic fall mainly due to supply chain disruption concentrating the virus pandemic. As Bangladesh is highly depends on imported cotton for its apparel production, such import is posing severe threat to boost the export growth.
Industry insiders said that cotton imports witnessed a slump for the first time in over a decade last fiscal year due to a fall in demand from local mills amid a stunning drop in apparel work orders for virus pandemic. The cotton imports were on the rise up until February this year for higher demand for yarn and other fabrics from garment exporters.
In fiscal 2019-20, Bangladesh imported 7.1 million bales of cotton which is 13.4 per cent from a year earlier, according to data from the Bangladesh Textile Mills Association (BTMA). However, most of the spinning and weaving mills were also shuttered during the March-June period. When the nationwide lockdown eventually came to an end on May 30, most mills resumed operations with previous stocks of cotton rather than importing more despite the significant fall in price for the cellulose fibre at international markets.
Almost all of Bangladesh’s domestic demand for cotton is met through imports as local growers can only supply less than 3 per cent of the country’s annual demand. Both the import and consumption of cotton in Bangladesh had risen steadily for the past decade as the country’s thriving garment sector has led to the formation of many strong backward linkage industries. The garment sector has seen tremendous growth over the years as Bangladesh’s status as a least-developed country allows its apparel products to enjoy duty-free access to many developing and developed nations.
“Since last month, the consumption of cotton started growing as garment factories resumed production after about three months,” said Khorshed Alam, managing director of Little Group, a leading cotton importer and consumer. Millers used their previous stocks of cotton after reopening their factories following the lockdown, he informed. Besides, many importers delayed releasing cotton shipment from the port amid the coronavirus outbreak. Textile millers also faced other issues, such as having to preserve unsold stocks of yarn and other fabrics.
However, the previous inventory of such materials has emptied significantly due to the return of demand from garment manufacturers. “So now, we will start importing cotton again,” Alam added. The pandemic is the sole reason for the declining trend of cotton imports, said Razeeb Haider, managing director of Outpace Spinning Mills. Most garment factories in Bangladesh are now running at 75 per cent of their total production capacity and this indicates that work orders are coming back.
The demand for various fabric materials could go even higher after September if the international retailers continue to source their products from Bangladesh at the current pace, he added. Alam and Haider, BTMA President Mohammad Ali Khokon said that more than 50 per cent of the annual sales target for fabrics had been met by July.
“I hope sales recover by more than 75 per cent by September and fully by the year-end.” By January next year, sales should return to its previous growth rate, Khokon added. Of the $8 billion invested in the primary textile sector, Tk 20,000 crore has already been lost to the coronavirus fallout, according to numerous millers. About 11,000 micro, small, medium and large spinning, printing, dyeing and weaving mills were unable to produce any goods in March and April for fear of coronavirus contagion. As a result, the millers missed two mega sales events incl;uding Pahela Baishakh and Eid-ul-Fitr.
Currently, there are about 450 spinning mills in the country while total investment in the sector stands at Tk 40,000 crore. Besides, Tk 30,000 crore has been invested in the weaving and dyeing sectors. However, experts have underscored the need for providing adequate policy and financial support for the stakeholders so that they can be able to meet the local demand as well as to save the foreign currencies.
Source: Daily industry news
