Globally fashion clothing has been moving out of cotton fiber to man-made fiber. On the contrary, Bangladesh apparel industry is known for cotton oriented fibers. But due to the global increase in the use of synthetic yarn, local spinning mill owners are choosing for investing more in this segment to cut their reliance on cotton yarn to stay competitive in the global market.
As part of the transformation, leading spinning mills, including Envoy, Matin Spinning of DBL Group, Maksons, Square, and Shasha Denim, are investing in synthetic yarn.
As a backward linkage sector for the export-oriented readymade garment (RMG) and textile industry, spinning mills have been facing a rough rivalry with imported fabrics and yarns for the last 4 to 5 years.
Mohammad Ali Khokon, President of the Bangladesh Textile Mills Association (BTMA) said that recently the demand for cotton-made yarn had fallen by 35% on the global market.
Khokon further added, “Most of the buyers have been preferring synthetic and mixed yarn-based fabrics for a couple of years. That is why we are investing more to produce this type of yarn.”
The BTMA President added that local spinning mills can meet about 80% of the demand of knit yarn and 40% of that for woven yarn while synthetic and mixed yarn are mostly imported from China.
A sister concern of DBL Group, Matin Spinning Mills recently decided to invest Tk1.86 billion to set up a special yarn unit to manufacture synthetic yarn.
MA Jabbar, Managing Director of DBL Group, said, “We are investing to increase synthetic yarn production in line with the demand in the global market. We also have plans to invest more in product diversification.”
The Matin Spinning special yarn unit will increase the company’s daily production capacity by 10 tones and the assessed turnover will grow by Tk1 billion per year, as per the Dhaka Stock Exchange website.
Comparable to DBL Group, Envoy Group will invest Tk1.25 billion in setting up a synthetic yarn unit. The new unit will produce 12 tons of yarn per day and will come into operation by October.
Kutubuddin Ahmed, Chairman of DBL Group, said the demand for synthetic yarn is rising worldwide, adding that its production cost is low and it is quite sturdy.
Kutubuddin further highlighted, “On the other hand, raw cotton prices have been unstable for the last few years in the world market and that is why cotton yarn production cost is increasing. So, we could not maintain profit margins by using cotton yarn.”
One of the top 10 spinning mills in the country, Maksons Group has said to invest around Tk100 million in three new spinning units in Mirsarai Economic Zone.
While a concern of Maksons Group, Metro Spinning Limited will invest Tk3.40 billion in a unit while Maksons Spinning Mills will dispense Tk2.54 billion and Tk3.48 billion into 2 other units, according to company insiders.
Mohammad Ali Khokon, also the Managing Director of Maksons Group, said, “We are going for a big investment to manufacture high-value diversified products so that we can stay competitive in the market.”
This is possibly to be the biggest investment plan by a Bangladeshi textile group amid the ongoing COVID-19 pandemic.
Square Textiles is to invest Tk300 million while Mozaffar Hossain Spinning Mills has already invested Tk2.50 billion to increase synthetic yarn production.
Shasha Denim has signed a deal with the Bangladesh Export Processing Zone Authority (BEPZA) to lease 8 plots in the Dhaka Export Processing Zone (DEPZ) area for future business expansion.
Khokon stressed the utility price hike had been squeezing spinning mills’ bottom line since 2018, putting the capital-intensive sector in trouble even before the pandemic struck. Further adding that the business is not going well at the moment due to the COVID-19 pandemic but the dip would not last forever.
Moreover, the pandemic came as a fresh blow to the sector, hindering production, swelling unsold stocks, and unsettling cash flow. But numerous textile mills have already cleared their stocks and fresh orders are coming from RMG makers.