Quality, price bring home textile buyers to Bangladesh

At least eight companies from Europe and the USA, who used to buy home textile products from Pakistan and China, have started doing business with Bangladeshi exporters in the last six months.

This moving away by the international buyers from Bangladesh's competing countries is being considered a sign of new hope for the country's home textile industry.

According to business insiders, Bangladeshi exporters have attracted these buyers with quality products at a competing price and on-time delivery.

They said that the use of home textiles has seen an increase across the world as people are staying home for longer periods during the Covid-19 pandemic leading to a big jump in home textile exports in the last financial year.

However, exporters have been facing trouble because of the abnormal rise in the price of yarn, the main raw material for home textiles. Exporters claim that local spinners have created an artificial crisis in the country under the pretext of the rising cotton price in the international market and have raised the price of yarn steeply.

To solve this crisis, entrepreneurs in the sector, who purchase yarn locally through back-to-back LCs, have sought permission from the government to import yarn duty-free. 

The exporters are expecting a big growth in home textile exports in the current financial year as well if these problems are resolved.

According to Bangladesh Terry Towel and Linen Manufacturers and Exporters Association (BTTLMEA), the eight new buyers that have started business with Bangladesh in the last six months include the well-known Standard Textile in the United States. 

M Shahadat Hossain, chairman of BTTLMEA, told The Business Standard, "Our company has started business with more than one exporter, including Towel Tex. The company used to import home textiles from Pakistan."

Similarly, one of the two home textile companies of Noman Group, the largest home textile exporter in the country, has recently got a new buyer.

M Shahadat Hossain said that more international companies are also considering purchasing home textile materials from Bangladesh.

"Some buyers are not getting products as per their demand from Pakistan and China. As a result, there is a good prospect here for us," he said.

The global market size of home textiles is currently more than $104 billion. By 2025 it could be $133 billion. Like readymade garments, China is also number one in home textile exports. Pakistan is in a good position in exporting home textiles.

But the share of Bangladesh in this sector in the world market is still about only one percent.

Most of the factories in Bangladesh export medium and general quality home textile items. However, Noman Terry-towel, Zaber and Zubair Fabrics, ACS Textile, Shabab Fabrics and some other companies export relatively high-priced home textile items.

Towels account for 40% of total exports and bedding around 50%. Bedding includes bed sheets, pillows and cushion covers.

Noman Group exported home textile products worth $320 million out of the total $1.13 billion exports from Bangladesh in the last fiscal year.

Rising yarn prices

In spite of this positive development, the home textile sector is beset with rising raw material and fuel prices that are hurting the industry.

The continuous rise in yarn prices over the last one year has worried the entrepreneurs in the home textiles sector. Buyers are not willing to share the extra cost. As a result, many producers are being forced to take orders at lower prices.

According to industry insiders, the type of home textiles that Bangladesh exports, including towels, is made mainly of 10 counts and 16 counts yarns. 

M Shahadat Hossain said the price of 16 count yarn has gone up by 78% and the price of 10 count has risen by 54% in the last six months. He complained that local spinners have been creating an artificial crisis based on the rising cotton price scenario.

The BTTLMEA in this regard sent a letter to the ministry of finance on 22 June seeking permission to import two types of yarns with duty-free facility for the terry-towel factories which do not have bond license through back-to-back LCs.

According to the current rules, companies with bond facility can import yarn or cloth with duty free facility on condition of export. They can also purchase yarn from local spinners with the same facility through back-to-back LCs. But in case of import, duty has to be paid.

The letter said around 75% of the cost of towels goes to yarn purchasing. As a result, many producers are incurring losses.

However, local yarn manufacturers refuted the statement of the home textile manufacturers that they have increased the price of yarn excessively.

Md Khorshed Alam, former director of BTMA and chairman of Little Group, told The Business Standard that the price of yarn has not increased in proportion to the price of cotton. He claimed the price of cotton, in some cases, has doubled.

Commenting on the demand of the home textile manufacturers for duty-free import of yarn, he said imports would be costlier than locally manufactured yarn. He also added that last year the price of the main raw material of home textile, 10 count cotton, was 62 cents per pound whereas its current price is 95 cents, an increase of about 53%.

Cotton price information gathered from World Incorporated shows the price of cotton has gone up in the last one year. The organisation says, in March 2020, the world market price of cotton was 68 cents per pound on an average and it went up to 96 cents last June, an increase of about 42%.

Costly gas connection

Entrepreneurs in this sector also mentioned that the complex and costly procedure of getting gas connection and the recent shipping crisis have been a major obstacle to the development of the sector.

The BTTLMEA president said, "We have to spend a lot of extra money to get a gas connection. It costs around Tk3 crore to get a connection. But the actual cost should not exceed Tk20-25 lakh. Who would want to invest so much money just for gas?" 

He said many people would like to invest in the sector if the problem in obtaining gas connection is solved.