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Rising yarn prices bring smile to textile millers

10/5/2021

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Bangladeshi spinners and textile millers say they stocked cotton when the international rates were low
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​Local textile millers racked in moderate growth in revenue riding on the burgeoning rates and demand of yarn and fabrics in the January-March quarter of this year.

Major Bangladeshi textile market players such as Square Textiles Limited, Malek Spinning Mills Ltd, Envoy Textile Ltd, Matin Spinning mills Ltd, Argon Denims Ltd and HR Textile Mills Ltd clocked growth up to 78% during the third quarter or Q3, according to the companies' financial statements.

Textile millers said they stocked cotton during the pandemic as the prices were low. Yarn market later rebounded and surged followed by the US ban of China's cotton in January.
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Matin Spinning Mills Ltd, a sister concern of DBL Group, enjoyed 24% growth in revenue to Tk125.25 crore in Q3 this year.

DBL Group Managing Director MA Jabbar said almost every spinner is enjoying the growth in revenue, and they are making a handsome profit margin in Q3.

"We have done well in cotton sourcing and yarn selling," he added.

The managing director said they have taken advantage of the cotton price as they stocked cotton when the rates were low due to the pandemic.   

On top of this, the US restriction on China's Xinjiang province cotton facilitated spinners and textile producers in Bangladesh, Pakistan and India. Jabbar said the ban affected cotton prices, but the yarn rates are still in their favour.

He said the ban, however, hurt the readymade garment manufacturers.

Export Promotion Bureau (EPB) data support his statement as knitwear products is the first ten months of the current fiscal year registered a 15.34% growth to $13.99 billion, while woven garment export fell by 2.71% to $12 billion compared to the same period in FY2019-20.

According to EPB, the country's apparel export saw an unusual 400% growth to $2.51 billion in April this year than the corresponding period of the previous year.

In the first ten months of 2020-21 fiscal year, apparel export rose by 6.24% to $26 billion compared to the same period of the last fiscal year.

The overall export growth was 8.74% to $32.07 billion in the ten months of this fiscal year compared to the year-on-year data.

Another large textile manufacturer Square Textiles enjoyed 60% growth in revenue to Tk396.04 crore during the January-March quarter.

Square Textiles General Manager (Operations) Taslimul Hoque said the textile mills have invested in efficiency improvement in the beginning of this fiscal year, and the results have been reflected in the revenue growth.

According to the DSE disclosure, Square Textiles Limited has invested Tk30 crore for technology up-gradation and capacity expansion.

Taslimul said the fabrics demand has been increasing after a fall during the first wave of Covid pandemic.

He added that mills that have strong financial capacity are taking advantage of cotton price fall in the first wave.

He said some factories might have stoked cotton for six months, though most of the local textile millers stock cotton for around three months.

Envoy Textile Ltd – the world's very first LEED certified platinum denim manufacturer – saw slight growth in revenue to Tk224.41 crore in the third quarter compared to the same period of the last year, but its profit fell by 77% to Tk3.56 crore.   

Kutubuddin Ahmed, chairman of Envoy Textile, said the business returned to the pre-pandemic era but production cost went up at the same time.

Apart from container shortage, he said raw materials such as cotton and chemicals, and the freight cost have been increasing day by day – taking a toll on the business.

"Due to the shortage, we are facing uncertainty over raw material supply and shipping products on time," said Kutubuddin, who was the president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).
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