Cotton yarn exports are expected to grow around 6 percent in the next fiscal as Bangladesh has found new markets in Vietnam and Thailand.
Cotton consumption in Bangladesh will increase 7 percent to 7.28 lakh tonnes this fiscal year for continued export growth of garment and yarn, according to the Economist Intelligence Unit (EIU).
The country currently consumes 6.8 lakh tonnes of cotton a year, according to data by Bangladesh Textile Mills Association (BTMA), the platform for cotton importers and spinners.
“In Bangladesh, cheap labour costs, relocation by Indian and Chinese companies, and investment in the textiles sector suggest that consumption growth will be strong,” EIU said in a report.
Trade data published by the state-owned Export Promotion Bureau show cotton yarn exports performing well in the first eight months of fiscal 2012-13.
From the next fiscal year, annual consumption growth will average 6.5 percent with significant negative risks, according to the report.
Among the risks, Bangladesh’s poor record on safety and labour rights, recurrently illustrated by deadly accidents in the garment units, could undermine the country’s image, prompting international companies to relocate production.
The recent spate of political violence has not adversely affected the textile sector yet, but could become a concern if it leads to a prolonged period of social unrest and strikes, the report said.
“Consumption growth could also be stymied by a persistent undersupply of energy to the industrial units or by a sluggish recovery in end-user demand in the EU, which accounts for over half of Bangladesh’s garment exports.”
Finally, there is also a risk that the textiles industry could boom without providing a fillip to local cotton consumption. Under new EU origin rules, Bangladeshi apparel exporters now qualify for duty-free access to the single market, even if the garments contain imported yarn and fabric.
“We have also raised our consumption growth forecast in Vietnam and Indonesia, which will both benefit from a loss of competitiveness in China’s cotton and textile industry,” according to the report.
Consumption will be underpinned by relatively cheap labour costs, an expanding textiles industry and increasing demand for cotton yarn from China.
“Bangladesh has found Thailand and Vietnam as new yarn markets. Our export of quality and special cotton yarn is increasing to the two markets. I hope, in the near future, we will be able to send cotton yarn to China, the largest apparel supplier worldwide,” BTMA President Jahangir Alamin said.
Increasing cotton consumption is a positive sign for the country’s primary textiles sector, Alamin added.
Global cotton consumption is forecasted to grow 1.7 percent in 2012-13 after two consecutive years of contraction, largely in response to the sharp fall in cotton prices in 2012, which has improved price competitiveness with synthetic fibres.
Continued growth in consumption in 2013-14 and 2014-15 assumes that the global economy gradually recovers, that another price spike is avoided and that ample availability persists.
However, the report released on June 1 said consumption will remain constrained structurally by the ongoing greater use of man-made fibres. The shift from cotton usage was accelerated by prevailing high prices in 2010-11 and has been most prominent in China.
Source: The Daily Star
