Readymade garment (RMG) exports from Bangladesh gained 11.48 per cent year-on-year in the July-September quarter, according to the provisional data released by the Export Promotion Bureau. However, increasing prices of coal, raw material supply disruption from China due to power crisis there and other factors may put a break in October-December.
The price of cotton, the main raw material to produce 30-count yarn used for making knitwear, is currently at a decadal high in international market. Bangladesh being the second-largest importer of cotton, may feel a pinch of this price hike.
Secondly, the price of yarn is currently high in Bangladesh compared to its competing countries like India and Pakistan. Further, its imports of yarn and fabric from China, the key raw material supplier to Bangladesh’s textile and garment industry, are likely to face delay owing to the current electricity shortage there.
Readymade garment (RMG) exports from Bangladesh gained 11.48 per cent year-on-year in the July-September quarter, according to the provisional data released by the Export Promotion Bureau. However, increasing prices of coal, raw material supply disruption from China due to power crisis there and other factors may put a break in October-December.
Around 95 per cent of man-made fibre yarn that Bangladesh uses for making the final products are imported from China. Bangladesh also does not produce viscose, synthetic fabrics for outerwear, and specialised fabrics for garments. It imports all these from China. Moreover, Bangladesh textile mills are equipped to supply yarn for knitwear and denim fabric, but not for woven apparel.
In October-December 2020, Bangladesh imported $446.322 million of yarn, of which $203.241 million of yarn came from China, according to data from TexPro, Fibre2Fashion’s market analysis tool. Likewise, Bangladesh’s fabric imports were valued at $1.693 billion during the quarter under discussion, with China alone accounting for $1.180 billion.
In addition, power supply which is needed to keep modern apparel sewing units running, is dependent on coal. Bangladesh completely depends on import for its yearly coal requirement of about 80 lakh tonnes. The global economic recovery post-COVID has resulted in international coal prices skyrocketing by 70 per cent in the past 12 months.
It may also be noted here that Bangladesh did not import coal from its neighbouring India for around eight months this year, resulting in a rise in price of coal to about Tk 18,000 per tonne from around Tk 8,000 per tonne a year ago. With India itself facing a shortage of coal, Bangladesh would have to depend on Indonesia for its coal import. While coal is not a direct requirement for the running of the garment industry, the high cost may result in higher cost of power consumption for apparel making units.
These days, several orders from China are shifting to other countries under the ‘China plus one’ sourcing strategy being adopted by global retailers, orders are pouring in Bangladesh. So, if production is hampered due to any reason, it would be a challenge for the country’s apparel industry, which accounts for over 80 per cent of export revenue.
Fibre2Fashion News Desk (RKS)
