Cotton leaders eye growing market share in post-pandemic era despite price hike
The US can supply more reliable and high-quality cotton to Bangladesh, the second-largest importer of cotton in the world.
The global giant is also eyeing a growing market share in the post-Covid-19 pandemic era.
Although US cotton is now costlier with the raw material seeing a global price hike, cotton sourced from the country can lower the cost at the end of production for mills, manufacturers, as well as brands and retailers, based on its quality and reliability supply.
Cotton prices soared 21% year-on-year to $1.99 per kilogram in the January-March quarter of 2021, according to World Bank Commodities Price Data.
Its price rose initially to 85.5 cents per pound, the highest in the last four years, mainly because of a looming trade war between the US and China, much to the chagrin of Bangladesh's apparel makers.
This year in October, cotton was traded at $1.20 from 90 cents in the international markets, the highest in the last decade according to industry insiders.
Despite Covid-19, Bangladesh’s cotton imports increased 9% in marketing year (MY) 2019/2020, to 7.5 million bales [or 1.63 million metric tons (MMT)].
Bangladesh’s high demand during the first half of the marketing year combined with success in combating the Covid-19 outbreak has allowed textile and garment companies to maintain operations, despite a few short-term disruptions.
US cotton exports to Bangladesh in MY19/20 reached 230 thousand metric tons (TMT), up 28.9% over MY 18/19.
The US cotton market share was approximately 14 % in MY19/20, which is second to India’s 23% market share.
For FY 20/21, it is estimated that Bangladesh’s cotton imports will slightly decrease to 7.1 million bales, given the uncertainty in global demand and relatively low import numbers in the first months of MY2020/21 according to global forecasts.
The overall growth of the sector looks positive, remarked Ali Arsalan, Bangladesh representative of Cotton Council International (CCI), as he mentioned that 1.5-2 million spindles look to be added in the next 2 years.
To support this growth and users of US cotton, the complimentary Cotton USA Solitons Team can assist spinning mills with everything from courses on how to buy US cotton to bale management and processing of US fiber.
Currently, Bangladesh imports only 11% of its cotton from the US.
Market overview
“I believe the maximum market share of US cotton achieved in Bangladesh was around 15% in the last 20 years. It varies a little every year and this year the market share is around 11%.
It is on the lower side, due to price and shipment issues. In 2019-2020, the market share was around 13-14%. However, there is a major change in Cotton USA as it overhauled its policy recently with the aim to re-conceptualize the sustainably sourced cotton,” said William R. Bettendorf, director of supply chain marketing of South and South-East Asia of Cotton USA.
According to cotton sector leaders of the USA every bale of cotton supplied is tested, quality-guaranteed, and provides a better spinning consistency while keeping sustainability at its core, but geographical distance makes US cotton expensive and non-tariff barriers such as marketing and educating the local spinners about the benefits of US cotton are other major challenges.
“No one in the world can supply quality cotton-like us. Every step of cotton production is data-driven, which gives us more insight. We have also leveraged technology to eradicate boll weevil from all cotton-producing areas of the United States, with the exception of a small region in southern Texas that does not put the unnecessary and additional cost burden on local importers," added Bettendorf.
However, Bangladesh still resorts to a half-century-old fumigation process that is not done by any other major cotton importing markets like China or Vietnam.
“We also carry out third-party investigations, audits as well as provide necessary knowledge-transfer to importers of cotton from the US to give them the maximum benefit while reducing the carbon footprint of the industry for sustenance,” said Joerg Bauersachs, head of CCI Technical services.
On the other hand, Bangladesh Textile Mills Association (BTMA) thinks the government needs to address non-tariff barriers entailing freight and fumigation and others for the industry to develop further.
BTMA president Mohammad Ali Khokon said: “The fumigation test is a duplication of the test at Bangladesh port since the US cotton is fumigated before shipment and there is no report about the rejection of the US cotton consignment to date. American farmers and traders use modern ginning techniques so that the cotton does not pick up any contaminant during shipment and use at mills.” DHAKA Tribune
(The news article has not been edited by DFU Publications staff)
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