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Bangladesh yarn markets stable with falling cotton prices

The yarn market has been stable in Bangladesh thanks to the declining cotton prices worldwide. Yarn stocks at spinning mills in Bangladesh have gone down amid rising demand from garment exporters. Garment exports increased 9.47 per cent year-on-year in the July-February period of the current fiscal year.

Bangladesh has recently overtaken China as the largest cotton importer in the world as China has stopped importing cotton due to its huge stockpile. As of August, China's cotton stock stood at 64.58 million bales, which is half the annual global production. China’s stock rose because of a drop in consumption that resulted from higher production costs and shortage of workers. In 2015, Bangladesh imported 6.1 million bales of cotton, which was 5.59 million in 2014.

The changing composition of readymade garment exports from Bangladesh in recent years has created a steady demand for yarn and cotton in the local market. This shift has taken place primarily because of two reasons: the necessity of establishing backward linkages to improve delivery response time for effective competitiveness; and the relatively small investment that is required to establish these linkages in the knitwear sector.

Investments in composite knitwear manufacturing units have gained momentum in the last 8 to 10 years, creating a substantial demand for good quality yarn and in turn demand for cotton for spinning.