Yarn market declines for local spinners due to import surge
Due to higher production costs, domestic textile millers, especially spinners, are facing uneven competition from foreign competitors, leading to a loss of orders for yarn even from local ready-made garment (RMG) exporters. RMG exporters now prefer sourcing raw materials from abroad, which hinders the growth of the local spinning sector.
According to central bank data, yarn imports recorded double-digit growth during the first nine months of the current fiscal year (FY), while imports of other raw materials like raw cotton, textiles, and staple fiber declined. Yarn imports grew by over 10 percent during the July-March period of FY 2023-24 compared to the same period last year, amounting to $2.32 billion, up from $2.10 billion in FY 2022-23.
Overall imports of RMG inputs fell by 9.1 percent during the first nine months: raw cotton by 24.9 percent, textiles and articles by 8.2 percent, staple fiber by 6.1 percent, and dyeing and tanning materials by 3.1 percent. The country spent $12.17 billion on these goods, down from $13.39 billion in the same period last year.
Exporters argue that locally produced yarn is more expensive than imported varieties. Textile millers attribute this to high utility costs and poor gas supply, which drive up production costs. Syed Nurul Islam, chairman and CEO of Well Group, noted that as imports of raw materials like raw cotton and staple fibers declined, yarn imports increased. Yarn is essential for manufacturing fabrics and ready-made garments.
The Well Group, with six production units—including one spinning, one fabric, and four garment factories—illustrates this trend. Garment exporters typically source raw materials locally when they face work order pressures and need to shorten lead times despite price differences. However, high utility costs and gas shortages have driven up the prices of locally produced yarn, explained Islam, who is also a director of the Bangladesh Textile Mills Association (BTMA).
Local yarn is losing its competitiveness as garment exporters increasingly source yarn from abroad under bonded warehouse facilities, with Indian, Pakistani, and Chinese yarn being cheaper than Bangladeshi yarn. Faruque Hassan, former president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), highlighted that the increasing yarn imports despite the decline in other raw material imports is concerning. He emphasized the need to boost local consumption and bring more garment work orders.
BGMEA President SM Mannan Kochi pointed out that local yarn prices are higher than imported ones, making exporters opt for foreign yarn despite receiving cash incentives for sourcing locally. BTMA President Mohammad Ali Khokon accused importers of selling yarn at dumping prices, supported by various government policies in their countries, such as incentives on labor costs and electricity, which allow them to sell at their production cost.
In contrast, Bangladesh lacks the main raw material—cotton—and faces gas supply shortages and rising bank interest rates. Khokon warned that continued reliance on imported yarn could lead to many textile mills shutting down, unable to compete. Local textile mills currently meet about 80 percent of the knitwear subsector demand and 35-40 percent of the woven sector demand.
Bangladesh earned $37.20 billion from RMG exports during the July-March period of FY 2023-24, with knitwear contributing $21.01 billion and woven garments $16.19 billion, according to the Export Promotion Bureau (EPB) data.
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