A severe natural gas shortage across Bangladesh's core industrial belts is no longer merely disrupting factory schedules; it has begun eroding international buyers' confidence and triggering a decline in new export orders.
Despite a seasonal bump in overall July exports, Utilization Declaration (UD) tracking data—a key leading indicator for forward apparel procurement—shows a 2.8% to 3.0% drop in new order registrations.
Compounded by production cuts, rising freight expenses due to emergency air shipments, and bank credit pressures, over 1,000 factories across central manufacturing hubs are operating near a standstill.
New order registrations dropped approximately 2.8% to 3.0% in July, signaling a forward export slowdown despite near-term shipment clearances.
Over 1,000 RMG factories across Savar, Ashulia, Gazipur, Dhaka, Narayanganj, and Mymensingh are severely paralyzed, with many limited to just 2 to 3 hours of daily production.
Over 150 textile mills have permanently closed over the past two years, with remaining facilities operating at below 60% capacity due to low gas pressure.
Bangladesh posted $4.72 billion in total export earnings in July (including $3.89 billion in apparel)—the highest monthly total in 12 months—driven by seasonal winter shipments. However, year-on-year exports slipped nearly 1%, masking underlying order erosion.
Severe wet-processing delays have forced manufacturers to turn to expensive air freight to avoid buyer penalties and shipment cancellations.
In Gazipur alone, ongoing closures, order cutbacks, and financial distress have led to an estimated 150,000 manufacturing job losses over the past two years.
Because Bangladesh's knitwear industry relies heavily on local spinning and dyeing mills for raw fabric, the natural gas shortage has hit knitwear producers particularly hard.
When upstream primary textile facilities cannot run their boilers, downstream garment assembly stalls, forcing companies to import raw fabric at higher costs and longer lead times.
Industrial Sector | Operational Status & Capacity Loss | Key Cost & Freight Drivers | Forward Demand Trajectory |
Knitwear Assembly | Severe: Operating at ~40% capacity; shift hours reduced | High reliance on diesel generators & emergency air shipments | Declining: July UD orders down ~3%; buyers shortening order horizons |
Primary Textiles (Spinning & Dyeing) | Critical: ~150 mills closed over 2 years; active units operating below 60% | Low pressure (1–3 PSI) halts boilers and fabric finishing | Severe: Reduced domestic yarn/fabric supply forces costly fabric imports |
Industrial Clusters (Gazipur & Savar) | High Risk: Hundreds of units facing partial or total shutdowns | Elevated overheads, bank loan service pressures, and labor displacement | Contraction: ~150,000 worker layoffs over 24 months across mixed industries |
Woven Apparel Line | Moderate-High: Delayed lead times; fabric backlogs | Lead-time penalties; margin erosion on fixed-price buyer contracts | Stagnant: Buyers seeking shorter delivery guarantees from regional rivals |
Buyer dynamics and escalating cost pressures
Global retailers are reacting cautiously to the supply chain disruptions.
While some buyers are granting minor delivery extensions, many are reducing order volumes or sourcing from alternative suppliers in Vietnam, Cambodia, India, and Pakistan.
At the same time, factory owners are absorbing significant financial losses.
Industrial utility shortages have driven up overhead costs through constant generator use, air freight bills, and uncompensated idle labor hours.
Since international buyers are unwilling to accept price increases, these rising expenses directly undercut factory profit margins.
Adding to these domestic challenges, exporters face external pressures, including updated US tariff policies, global geopolitical shifts, cautious consumer spending, and payment collection delays from international buyers such as Poland-based LPP.
"At least one thousand garment units across Dhaka, Gazipur, Savar, Ashulia, Narayanganj, and Mymensingh are facing an operational standstill," stated Mohammad Hatem, president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA).
"In the past, gas pressure would recover somewhat during night shifts, but line pressure is now failing around the clock. Without reliable gas supply, factories cannot meet delivery schedules, creating serious risks for future order pipelines."
"The gas crisis in our manufacturing sector has reached the level of an economic emergency," noted Showkat Aziz Russel, president of the Bangladesh Textile Mills Association (BTMA).
"It is impacting not just garments, but textiles, ceramics, steel, and paper. Over the past two years, nearly 150 textile mills have shut down. When local spinning and dyeing mills are forced to cut production, garment factories must import raw fabric from abroad, which erodes domestic value addition and places extra pressure on our foreign exchange reserves."
Securing national export capacity
To stop forward order cancellation and restore international buyer confidence, industry leaders recommend four urgent policy measures:
- Guaranteeing baseline gas pressure for high-density textile and dyeing hubs in Gazipur, Savar, and Narayanganj.
- Temporarily streamlining customs procedures for raw material imports to help factories offset local fabric shortages and meet buyer lead times.
- Extending credit liquidity and restructuring bank loan obligations for energy-impacted factories to prevent liquidity crises and workforce layoffs.
- Expediting terminal maintenance and land-based LNG storage projects to ensure stable long-term energy supplies for major industrial zones.
While July export earnings offered short-term relief, declining forward order registrations highlight the growing risk to Bangladesh's export sector.
Ensuring reliable industrial energy is essential to maintaining production schedules, preserving buyer trust, and protecting the country's position in the global apparel market.
