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To                                                                                            Date: 14/01/2009

Dear Sir


  • In Bangladesh, Yarn makers demand stimulus package: Yarn makers yesterday urged the government to roll out a stimulus package to safeguard the sub-sector from any fallout from the global financial recession. The producers complained that they had suspended 30 percent of production in their spinning mills due to a drop in sales on the local market and cheap imported yarn. "We need financial assistance to keep the sector afloat, not for our own benefit. This will enhance competitiveness in the period of world financial recession," said A Matin Chowdhury, managing director of Rahim Textile Mills Ltd, a major yarn-manufacturer. Some neighbouring countries have taken different measures to safeguard their textile sector from the global financial recession, Chowdhury said. Chowdhury and Abdul Hai Sarker, president of Bangladesh Textile Mills Association (BTMA), yesterday predicted a future impact on the local textile sector from the financial turmoil, while speaking to a group of reporters at the association office. Chowdhury pressed for hiking cash incentives to 10 percent from the existing 5 percent and introducing a 5 percent research and development fund to maintain a vibrant textile sector. According to the former president of the BTMA, Indian yarn producers are in an advantageous position, compared to Bangladeshi producers as India has announced a stimulus package for the sector and is providing R&D funds to manufacturers. Moreover, India produces raw cotton and manufactures capital machinery. The Indian government devaluated the rupee against the dollar. On the contrary, Bangladesh is a cotton and capital machinery importer but manufacturers hardly enjoy benefit from the government, Chowdhury said. "We want temporary financial assistance from the government. If the situation improves, the government may cut such assistance," said Chowdhury. Abdul Hai Sarker urged the government to provide a financial benefit to exporters for a temporary period, besides the existing 5 percent cash incentive. According to Bangladesh Bank data, L/Cs (letters of credit) worth $205.39 million were settled in July-October of 2008 compared to $142.70 million in the same period a year ago to import cotton yarn. In July-October of 2008, fresh L/Cs worth $150.04 million were opened to import cotton yarn against $141.77 million in the same period of 2007. According to BTMA statistics, 43 new spinning mills were set up in 2008 (January-December) with 9,44,744 spindles, up from 28 mills installed with 4,42,848 spindles in 2007. The country has a total of 341 spinning mills with an annual production capacity of 1600 million kg of yarn and total investment in the sector is 4.0 billion euros, according to BTMA statistics. Sarker said they can sell yarn at $2.55 per kg produced in their factories, but the same kind of Indian yarn sells at $2.15 per kg. Courtesy - The Daily Star
  • China Cotton Imports May Plunge 25% as Textile Demand Weakens: China, the world’s biggest cotton buyer, may import at least 25 percent less of the fiber as the global recession erodes demand for textiles, researchers at the Chinese Academy of Agricultural Sciences said. Imports may total 1.5 million metric tons in 2009, analysts led by Mao Shuchun at the Beijing-based institute said today in a report. China purchased 1.94 million tons of overseas cotton in the 11 months through November, according to customs data. Yarn production increased 3.8 percent in November and output of cotton cloth fell 1.37 percent, ending a 10-year period of “fast growth,” the analysts said. Cotton use may fall in the first half from a year earlier, they said. The Chinese government is buying 4.2 million tons of domestic cotton, or more than half of last year’s harvest, to boost agricultural incomes and stabilize planting. China is “certainly interested to first sell cotton from the state reserves” rather than importing, Winterthur, Switzerland-based Paul Reinhart AG said in a report last week. The price of seed cotton paid to Chinese farmers in December was down 25 percent from a year earlier as textile exports slowed, the analysts said. Over 60 percent of cotton farms are losing money, the Chinese researchers said. The country’s textile exports, the world’s biggest, fell 8 percent in November from October, the China Cotton Association said on Dec. 24. Courtesy - Bloomberg

Regards/Aditya Sekhsaria



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