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Corporate - August 17, 2022

Textile millers’ in triple trouble

Staff Correspondent: Bangladesh’s primary textile millers are in a gloomy scenario due to the three-pronged situation – persisting low gas pressure, fuel price hike and deteriorating yarn price. Recently yarn prices have fallen 20% in the past three months due to dwindling demand from readymade garment (RMG) makers in the face of a fall in consumer demand.
On top of it, the recent govt. the decision of zone-based weekly closure of factories also put the textile mills in a grinding scenario. Coupled with a rise in power tariffs.
The price of yarn is now $4 per kg, down from $5.2 per kg in May. If such price downfall lingers, Bangladeshi textile millers and the industry will be in a grim scenario as the entrepreneurs have to repay bank loans on time, say, industry insiders. And they are apprehensive about the future of the new investments done in the last 2 years – an estimated $3 billion.
Primary textile industry leaders say they are incapable to withstand any surge in production costs amid dropping yarn prices. Leaders also said that many apparel manufacturers are not fulfilling the deadline for opening LCs despite getting proforma invoices (PI) due to a fall in yarn prices. Moreover, they are not getting yarns despite opening LCs and also offering an inferior price than the settled price fixed in the proforma invoices.
A leading spinning entrepreneur expressed that in the last month has issued at least five proforma invoices to his purchasers but they have not opened the LCs within the stated time. Generally, a buyer has to settle LC within 7 to 15 days after getting PI.
Moreover, spinners sat that some buyers did not even receive the goods even after opening the LC and requested a lower yarn price by 10-20 cents even after receiving PI.
“I have already received such complaints from many spinning mills,” Mohammad Ali Khokon, President, Bangladesh Textile Mills Association (BTMA) said to the media.
About eight-nine months back when yarn prices were high, the situation was completely different. At that time, spinning mills were reluctant to supply their yarn even after issuing proforma invoices to garment manufacturers.
Apart from the price fall, millers are concerned about zone-based weekly shutting of factories for power rationing and low gas supply and the highest rise in fuel prices. Textile mills run 24/7 and if the government decides to decentralize the closure of factories once a week, will the mills get a nonstop gas supply in the remaining six days? – asks millers.
As per BTMA, there are over 1,500 textile mills in Bangladesh – with a total investment of around $7 billion, including spinning, fabric, dyeing-printing and finishing. And there are about 1,000 relatively small mills. And the total investment of textile mills in the country is about $7 billion.

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