India to resume cotton export

India, the second largest producer of cotton, yesterday lifted a ban on cotton export, at a time when Bangladesh is lobbying with Uzbekistan to strike a deal to ensure smooth supply for local spinners.

Bangladesh, which is fully dependent on imported cotton, went for an alternative to Indian as the neighbouring country has been frequently imposing ban on the export of the item for the last two years.

A delegation led by Commerce Secretary Ghulam Hussain is already scheduled to leave for Uzbekistan on May 4 to seek a state-level deal to reduce dependence on India.

India came up with the restriction several times last year and this year. The latest one came on March 5 mainly to build up the country's domestic stocks.

However, Bangladeshi spinners welcomed the yesterday's decision.

“The dependence on Indian cotton is increasing due to the country's geographical proximity. It takes shorter lead-time if we import cotton from India. Of course, the latest move is a positive sign for us,” said Jahangir Alamin, president of Bangladesh Textile Mills Association.

Production in the local spinning sub-sector faces troubles due the frequent changes in India's decision.

This time India changed its decision amid protests from its traders and on forecast of a higher yield, said a Bloomberg report, quoting Commerce Minister of India Anand Sharma yesterday.

Sharma said the traders can register for fresh shipment contracts within a day or two.

Sharma told this to journalists in New Delhi after a meeting of a panel of ministers headed by Finance Minister Pranab Mukherjee, according to the Bloomberg report.

Another reason for the previous ban was that exports surged 9.5 million bales (a bale weighs 170 kilograms or 375 pounds), the quantity that surpassed government estimates.

“Based on the revised estimates of cotton production by the Cotton Advisory Board as well as the agriculture ministry, we have decided to remove the suspension on registration of cotton exports,” Bloomberg quoted Sharma as saying.

Bangladesh imported more than 39.39 lakh bales of cotton in the year through June 2011, according to data from the commerce ministry.

Of the total amount, 41.82 percent was imported from India, 35.31 percent from Uzbekistan and other members of the Commonwealth of Independent States, 7.68 percent from Africa (East and West) and 15.19 percent from other countries, including the US, Australia, Pakistan and China.

News: The Daily Star, Tue, 01/05/2012

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Govt seeks Cotton deal with India

Bangladesh seeks an agreement with India to import 1.5 million bales of cotton a year to ensure a smooth supply to spinners, a senior official of the commerce ministry said yesterday.

If India agrees, a cooperation agreement will be signed between the two governments, but the private sector, not the government, will import the cotton, said Bangladesh Tariff Commission (BTC) Chairman Mozibur Rahman.

Rahman joined a meeting at the commerce ministry with Commerce Secretary Ghulam Hussain.

Bangladesh launched intense talks with the Indian government to ensure cotton supply despite a ban on the exports of the fibre. The spinning sub-sector in Bangladesh is heavily dependent on Indian cotton.

The government will open talks with Indian Textile Minister Anand Sharma, who is scheduled to visit Bangladesh on May 5.

India, the second largest cotton producer, banned exports on March 5 to build stocks for its domestic market.

BTC will prepare a paper for talks urging India to either lift the ban or sign an agreement to allow 1.5 million bales (1 bale=170kg) of cotton a year.

“BTC has convened a meeting for April 16 to take opinions from different stakeholders on the issue of cotton imports from India,” Rahman said.

In a normal situation, cotton traders can import as much as they want, but when the ban is in force, they cannot import the item, the BTC chairman said.

In recent years, Bangladesh's dependence on Indian cotton marked a rise as spinners prefer the next-door neighbour to other countries, as it cuts lead-time and carrying costs significantly.

The consumption of raw cotton in Bangladesh was estimated at 3.5 million bales in 2011-12, down around 5.5 percent from 2010-11, due to a decline in imports and weaker demand from the spinners, the United States Department of Agriculture said in a report.

Cotton consumption in 2012-13 is forecasted to reach 3.6 million bales, according to the report.

India yesterday allowed the export of 1 million bales of cotton that was registered with the trade ministry before the ban on shipments and will revalidate another 900,000 bales by April 17, according to a Bloomberg report.

India barred all cotton exports on March 5 to secure domestic supplies after shipments surged before the ban to about 9.5 million bales, more than the 8.4 million bale surplus the government estimated.

If Bangladesh requires cotton this year, it has to buy from the 1.9 million bales to be allowed by Apr 17.

Source: The Daily Star, Fri, 13/04/2012

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Spinners look abroad for Steady Business

Local spinners look to set up mills abroad to ensure a steady supply of raw materials in an increasingly unpredictable global environment.

“Setting up mills abroad will give us double benefits: it will ensure yarn and save energy,” said A Matin Chowdhury, managing director of Malek Spinning Mills.

India and Uzbekistan, two major sources of Bangladesh's cotton imports, are chosen by primary textile millers as investment destinations.

Chowdhury, also former president of Bangladesh Textile Mills Association (BTMA), said he plans to set up a one-lakh-spindle factory in India and bring yarn to Bangladesh.

Textile millers operate machines that spin cotton to produce yarn and fabrics, the major ingredient for producing readymade garments.

Following volatility in the global cotton and yarn markets last year, the issue hit the spotlight when prices of these raw materials went up three times compared with what it had been a year ago.

Moreover, cotton producing countries such as India try to cash in on the situation by imposing extra tax or withdrawing it and suspending cotton exports sometimes, according to businessmen.

Bangladesh requires over 37 lakh bales of cotton a year, according to BTMA data. Of which, 30 percent comes from India and 30 percent from Uzbekistan. Locally produced cotton meets only 2 percent of the market demand. The rest are imported from the US, Pakistan and some other countries.

“Despite being a cotton producing country, India is establishing textile mills in Uzbekistan considering security of its yarn in future,” said Mehdi Mahbub, chief executive officer of Best Sourcing Business Advisory Services.

Indian textile company Spentex bought two textile mills near Tashkent in August 2006 with an investment of $81 million. It also acquired one more textile company in Ferghana in 2007 and made further investment of $6 million. More Indian millers set up factories in Uzbekistan in the recent years.

“Businessmen who are financially capable can invest in India, a country with better infrastructure,” said Jahangir Alamin, president of BTMA.

“But spinning mills in Uzbekistan will not be viable for us,” said the BTMA president explaining that freight charge and lead time to receive yarn from Uzbekistan would be huge.

Bangladesh has over 400 textile mills of different categories and sizes with an investment of around $3.5 billion.

These mills meet 90 percent yarn needs of knitters and provide 40 percent fabrics for weavers. Knitwear and woven sectors accounted for nearly $18 billion of exports out of $23 billion earned by Bangladesh in fiscal 2010-11.

News: 

 The Daily Star, Sun, 05/02/2012

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Jute Spinners Feel Pinch of Middle East Uprising

Jute spinners feel the pinch of a slowdown in the demand for yarn due to the ongoing uprising in the Middle East and some North African countries, exporters claimed yesterday.

Spinners said Middle East, North African countries and Turkey import 66 percent of Bangladesh's yarn to use it as a raw material for making carpet. But people in the region are not in a state to feel the need for carpets due to the ongoing political turmoil and war there.

The slowdown in the demand has led to a fall in prices of jute yarn, they claimed.

''The Middle East is a major carpet market for our buyers. But the crisis has affected the demand for the product there,'' said Muhammad Shams-uz Zoha, chairman of Bangladesh Jute Spinners Association.

Exporters said they have been experiencing a tightened demand and a fall in the prices of jute yarn for the last two-three months as the unrest in the oil-rich Middle East and some North African countries deepened.

Export prices of jute yarn, which was hovering around $1,500-$1,700 per tonne in the August-September period last year, has dropped to $1,100-$1,150 per tonne now, said Ahmed Hossain, managing director of Nawbab Abdul Malek Jute Mill.

The uprising began in Tunisia protesting high unemployment and political repression. It later spread to Egypt, Libya, Yemen, Bahrain and Syria. The turmoil has already toppled Egyptian former ruler Hosni Mubarak and sparked a war in Libya.

''People in the region are not in a mood to buy non-essential goods like carpet. All are concerned about politics,'' said Mahmudul Huq, deputy managing director of Janata Jute Mills Ltd.

“We are worried. We see a drop in the flow of orders for the last two months,'' Huq said.

Although the jute spinners' claim of a fall in demand, export earnings from jute yarn and twine rose 43 percent to $381 million in July-March period of 2010-11 fiscal year, up from $265 million from the previous fiscal.

Exporters, however, said the effect of slowdown in demand and fall in prices on export earnings will be reflected in the later part of current fiscal year.

Jute yarn, which accounts for over 60 percent of total export earnings from the sector, is mainly exported to Turkey.

Muhammad Shams-uz Zoha said carpet factories in Turkey have cut down production because of the Middle East crisis.

''Nobody knows what will happen next,'' he said.

Belgium, Saudi Arabia, Syria, Jordan and Egypt also buy jute yarn and jute goods from Bangladesh.

Bangladesh, a major exporter of jute yarn, usually exports 3.5 lakh-3.8 lakh tonnes of yarn a year against the global demand of up to 4.5 lakh tonnes.

In the fiscal 2009-10, the volume of jute yarn exports was 3.8 lakh tonnes.

Mahmudul Huq feared that exports in terms of tonnage might drop.

Along with the jute yarn, the demand for some jute goods has also slowed down, a senior official of Bangladesh Jute Mills Corporation, seeking to remain unnamed, said to The Daily Star.

News Source: The Daily Star, Sunday, May 8, 2011

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