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Bangladeshi spinning mills doing good business

Bangladesh textile industry is witnessing a boom in the July-September period and onward given the global upsurge in apparel consumption.

Most local spinning mills are doing good business. Millers have expressed that the spinning mills businesses have been booming since the first wave of COVID-19. That trend has continued this year as well. millers have said that there is no reason to worry about the sale order of yarn till next March-April unless the new type of COVID variant Omicron causes major difficulties worldwide.

Figure: Riding on the recent positive order scenario textile millers are investing in the spinning sector.

Riding the positive order scenario textile millers are investing in the spinning sector.

Bangladesh Textile Mills Association (BTMA) says about 20 new textile mills, including several spinning mills, are being set up. Also, 20-30 old textile mills are investing to increase production capacity. An estimated $2.5 billion is being invested in it. As a result, 20 million spindles will be added in the spinning sector in the next two years.

BTMA President Mohammad Ali said to the media that a large quantity of yarn was unsold at each mill in 2020 due to COVID-19. At that time the average price of yarn was 2 dollars 60 cents. When the COVID-19 situation became normal, the demand increased tremendously. As a result, the spinning mills sold last year’s unsold yarn at a one-dollar extra from the average market price. So, most mills have made a profit. Normally spinning mills make 2-3 percent profit but this year it has increased to 5-6 percent, some mills have made 10 percent profit.

The BTMA President added that profits in the yarn business depended largely on buying cotton. If you can buy cotton at a lower price, you will get more profit. “There are good orders in the readymade garments sector,” he said.

That is why the demand for yarn is also high. Hopefully, there will be good business this year too, as there are no reports of deaths from amniotic fluid worldwide.

According to BTMA, there are about 450 spinning mills in the country at present. These spinning mills supply 85-90 percent yarn of knit fabric and about 40 percent yarn of woven clothing. The spinning mills imported 76 million bales of cotton in the last financial year for the production of yarn.

Spinning mills have done good business for several reasons. Supply was less than demand. The major issue was the global supply chain breakdown. Ships were not available to bring in imported cotton. On the other hand, many Indian spinning mills were closed in COVID-19. Then suddenly the price of cotton also went up. All in all, the production and selling price of yarn has gone to a favorable position.

The forecast is that cotton prices are unlikely to fall in the next year. Much depends on the demand for readymade garments. However, the demand seems to be good. Yarn prices are less likely to be the same as before. However, the price has been slightly modified and will be around four dollars per kg of yarn.

This positive vibe in the sector is also depicted in the Dhaka Stock Exchange. After analyzing the first-quarter financial statements of 10 spinning mills registered with the Dhaka Stock Exchange, it is seen that the sales of yarn of 8 spinning mills have increased in the first quarter of the current financial year as compared to the same period last year. Only two mills witnessed a decrease.

Dhaka stock market registered top 8 spinning mills revenue comparison between July-September 2020-21 and 2021-22 (in BDT billion)
Name 2020-21 2021-22
Square textile Ltd. 2.61 2.83
Maksons Spinning Mills Ltd. 0.97 1.57
Matin Spinning Mills Ltd. 1.06 1.56
Malek Spinning Mills Ltd. 0.64 0.92
Mozaffar Hossain Spinning Mills Ltd. 0.12 0.41
Prime Textile Spinning Mills Ltd. 0.31 0.40
Metro Spinning Mills Ltd. 0.15 0.28
Safko Spinning Mills Ltd. 0.7 0.13
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