Bangladesh's cotton and yarn imports declined in the first nine months of 2023 as falling demand in global and local markets, irregular gas supply and the US dollar crisis hit textile millers.
According to Bangladesh Textile Mills Association (BTMA) data, the country's cotton imports for making yarn declined 28 per cent year-on-year to 9.87 lakh tonnes in January-September.
In the same period a year ago, traders had imported 13.66 lakh tonnes of cotton.
Similarly, yarn imports fell 26 per cent to 6.29 lakh tonnes in the nine months to September from 8.51 lakh tonnes a year ago.
The decline in imports of cotton and yarn by textile mills comes at a time when export receipts by the readymade garment industry, which generates more than 80 per cent of the country's earnings from the external sector, have slowed down.
In October, apparel shipments declined 14 percent year-on-year. Overall, apparel sector earnings rose nearly 6 percent to $38.7 billion in January-October. According to Bangladesh Garment Manufacturers and Exporters Association, it stood at $36.6 billion during the same period in 2022.
A Matin Chowdhury, managing director of New Asia Group, a vertically integrated apparel manufacturing unit, said the decline in global demand has resulted in a 25 to 30 per cent decline in demand.
"There has also been significant disruption in production due to irregular gas supply. Local demand has also declined due to the current economic situation."
Choudhary, who is also a former BTMA president, blamed the high prices of gas and cotton for the rising losses of textile mills and the high dollar price for the sharp depreciation of the taka.
In January, the government raised the retail price of gas by 14.5 per cent to 178.9 per cent to ease its unsustainable subsidy burden amid a tight fiscal situation.
And central bank data shows the taka has lost nearly 30 percent against the US dollar since January last year, making imports costlier.
According to industry operators, local spinning and weaving mills meet about 90 percent of the textile raw material requirement for export-oriented knitwear, which is now the largest export earner in the apparel industry, and 40 percent of the demand for knitted fabrics. completes.
BTMA Chief Executive Officer Mansoor Ahmed said export-oriented mills were facing difficulty in accessing the Export Development Fund (EDF) for importing cotton and yarn due to dollar shortage.
Bangladesh Bank has increased the interest rate on loans given from its funds with the aim of making borrowing costlier in order to save foreign currencies. Foreign exchange reserves have fallen by about 25 percent since the start of the Russia-Ukraine war.
Ahmed said the problem of domestic market oriented spinning mills is more serious as they have to depend on banks to buy raw materials from foreign markets.
"The rising value of the dollar has increased the cost of imports."
BTMA president Mohammad Ali Khokon said many local market-oriented mills have suspended production due to shortage of raw materials.
"Export orders for clothing have fallen."
He said that the market is not going to return to normal before March next year.
“We have to stay afloat till then. So, we need support from the government and banks.”
Mohammad Hatem, executive president of Bangladesh Knitwear Manufacturers and Exporters Association, said the cotton import data reflects the current situation of the sector.
"The decline in imports is natural."
He said most knitwear factories are running at 50-60 per cent capacity as buyers are placing fewer orders.
"So, our consumption has declined. There is no sign of improvement in order flow either."
Matin said the coming days were going to be "extremely challenging."
“We are getting a disappointing picture in terms of gas supply,” he said, citing media reports.
"We are really concerned about the energy issue. Also, the demand is not increasing despite the overall capacity expansion."
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