Vietnam’s yarn production and cotton had to accept a slump in price to, US $ 2.6 per kilo and US $ 2.1 per kilo in December 2018 and January 2019, respectively, so as to maintain production and retain customers.
This was recently confirmed by the Vietnam Textile and Apparel Association (VITAS).
“When the gap between raw material buying prices and product selling price is US $ 1 per kilo, yarn makers are able to maintain operations, but between October 2018 and January 2019, the gap was reduced to 50 to 60 US cents per kilo, resulting in massive losses for the yarn makers.” – Le Tien Truong, Deputy Chairman, VITAS
Though in February 2019, things improved and the gap was an acceptable US $ 1 per kilo, it is highly unlikely to be sustained especially amidst the ongoing US-China trade tension.
According to the Vietnam Cotton and Spinning Association, ever since Turkey imposed anti-dumping measures on Vietnam, 70 per cent of Vietnam’s yarn products were exported to China, one of Vietnam’s major markets. However, China’s reduction of yarn imports due to trade concerns with US has severely impacted Vietnam’s yarn production.
Truong added that companies needed to manage risks in order to maintain production while expecting the yarn market to recover, which, according to local firms, may happen in the second half of 2019.