Bangladesh Spinning Mills Are Threatened By Fluctuations In International Cotton Prices

Bangladesh's import of yarn and fabrics has increased substantially this year. Bangladesh's dependence on foreign raw cotton has threatened its main textile industry. Bangladesh relies entirely on cotton imports, and its output can only meet 3% of the demand. The basic sectors of the major textile industry in Bangladesh include spinning, weaving, dyeing, printing and finishing.

The spinning industry is now facing the domestic market. Weaving Factories and knitting mills have difficulty in reducing yarn demand because they can import yarn from China and India at a lower price. Domestic spinning mills use high priced imported cotton to spin. However, yarn and cotton prices have declined almost daily since May. Therefore, domestic spinning mills are unable to sell yarn at a lower price. Domestic spinning mills are losing money every day because they sell cotton yarn at a price of $3 to 4 $/ kg, while the selling price in March and April is 7 dollars per kilogram.

On the other hand, looms and knitting factories like to import fabrics and do not want to buy Fabrics in the domestic market. After loosening the origin requirements of the least developed countries in January this year, the EU can get 12.5% duty-free for imported fabrics.

Therefore, garment manufacturers do not purchase in their own markets. Fabric 。 The EU's policy of origin has provided decades of protection for its major textile industries. At that time, garment manufacturers must purchase their fabrics and yarns to enjoy the EU's zero tariff preferences. After the EU relaxed its origin requirements, Bangladesh imported fabrics and yarns gradually increased, and factory inventories increased. In January to June, yarn imports increased by 18.21% over the same period last year. At the same time, the imports of woven and knitted fabrics increased by 51.18% and 293.06% respectively, which is quite amazing. From January to June, imports of yarn and fabric totaled 278 million kg, an increase of 25% over the same period last year.

At present, the stock of unsold yarns is up to 250 thousand tons, according to the current market value, which is 90 billion Taka. Spinning mills have cut production capacity by 30-40%, as inventories are growing. Under such circumstances, cotton imports have dropped slightly this year, and yarn consumption will not increase. The most expensive 30 yarn now sells for 3.30-3.40 dollars / kg, and the selling price a month ago is 4.50-5.60 USD / kg. From March to April, the sale price of 30 yarn was 7 US dollars / kg.

Many importers have already ordered cotton. Now they are in a dilemma, they signed. contract The price is very high and cotton prices can not be lowered now. If they fail to perform, they will be faced with the arbitration of the International Cotton Advisory Committee. In most cases, the International Cotton Advisory Committee will be inclined to suppliers. If arbitration occurs, Bangladesh will be at a disadvantage.

So far, Bangladesh has nearly 200 thousand tons of cotton that must be imported. The average price is 2.20 dollars / pound, and the finished yarn price has dropped to 3.30 US dollars / kg. Normally, Bangladesh needs 80000 tons of cotton per month, and the country imports nearly 1 million tons of cotton per year.

India, the world's second largest cotton producer, was banned in April last year. cotton The export situation has made the situation in Bangladesh worse. The global cotton prices have started to decline recently. India has lifted the export ban.

As the main textile industry faces 300 billion Tucker investments, Jahangir Alamin, President of the Bangladesh Textile Mills Association, said that the finance ministry and the commerce minister agreed to sit down with the spinning mill in August 21st to discuss the solution.