Vietnam's yarn industry faces difficulties in export

April 23, 2019 - Vietnam

Vietnam's yarn industry is facing many challenges in production and export, especially to China, one of its largest markets, feel experts. Last December and in January this year, yarn price fell to $2.6 per kilogram and the price per kilogram of cotton fell to $2.1 to maintain production and retain customers, says the Vietnam Textile and Apparel Association (VITAS).

Normally, in yarn production and trading, when the gap between raw material buying prices and product selling price is $1 per kilogram, yarn producers can maintain operations. However, from October last year to January this year, the gap was only 50-60 US cents per kilogram.

Therefore, yarn manufacturers had to suffer huge losses, a Vietnamese news agency quoted VITAS deputy chairman Le Tien Truong as saying.

In February 2019, the gap was nearly $1 per kilogram with cotton price at $1.9 per kilogram and yarn price at $2.8 USD per kilogram. This level was acceptable to yarn manufacturers.

However, the gap is unlikely to be sustainable due to the results of the US-China trade negotiations, according to VITAS.

The difficulties faced by the domestic yarn production industry are partly due to the US-China trade war, because 25 per cent of Chinese goods face taxes when exported to the United States.

For many years, Vietnam’s yarn products have been mainly exported to two major markets – China and Turkey. However, Turkey has applied anti-dumping measures on Vietnamese yarn and therefore, 70 per cent of Vietnamese yarn products are exported to China, the largest fabric producer in the world, according to the Vietnam Cotton and Spinning Association.

Therefore, China’s reduction of yarn imports due to difficulties in exporting textile and garment products to the United States has affected Vietnam’s yarn production. (DS)