Vietnam’s yarn industry keeps the ball rolling

06:00 | 06/01/2022 Industry

(VEN) - After a year of outstanding growth in export turnover, the yarn industry is forecast to return to balance in 2022, despite US anti-dumping tariffs imposed on Vietnam's polyester texturized yarn products.

Export target of US$5 billion

Vietnam's yarn industry recorded a sudden growth in both export volume and turnover in 2021. According to the Vietnam Textile and Apparel Association, in the first 10 months of 2021, the textile and garment export turnover reached US$32 billion, up 10.8 percent year-on-year. Fiber exports achieved record turnover of nearly US$4.5 billion, and are expected to reach about US$5.3 billion by the end of 2021, up 42 percent year-on-year; and fabric exports of all kinds reached US$2 billion, and expected at US$2.4 billion by the yearend.

vietnams yarn industry keeps the ball rolling

The yarn market will gradually find its balance point

According to the Vietnam National Textile and Garment Group (Vinatex), yarn inventories in China and other textile-producing countries have run out. In addition, the US ban on importing products derived from Xinjiang cotton had a strong impact on the yarn supply chain, and caused higher demand for yarn. The post-pandemic economic development stimulus packages and widespread vaccinations also helped kick-start the world economic recovery, and the demand for textile and garment products prospered again after interruptions in 2020.

The difference between cotton and yarn prices also reflected the effective performance of Vietnamese yarn companies. In 2020, the difference was US$0.3- 0.6 per kg, resulting in losses for most businesses. However, in 2021, the difference jumped to US$1.1-1.25 per kg, and yarn businesses all yielded high profit.

According to Vinatex, more than 70 percent of Vietnam's yarn industry output is for export, with about 55-70 percent exported to the Chinese market. On the other hand, the main input material of the yarn industry is cotton, which is entirely imported, with more than 50 percent from the US and the rest from other countries like Brazil, India, Australia, and West Africa. This makes Vietnam's yarn industry highly susceptible to economic, political and trade fluctuations.

vietnams yarn industry keeps the ball rolling

Anti-dumping duty

According to Vinatex, many factors will affect the industry’s 2022 prospects, with recovery of production, business, international trade and the global value chain creating a driving force. China, Vietnam's largest yarn import market, tends to focus on the production of high grade yarns and is also likely to increase imports of low and medium grade yarns in the short term, or shift production of these yarns to other countries.

Based on these forecasts, Vinatex believes the yarn market will gradually find a balance in the coming year. Yarn prices will be adjusted to redistribute profits between buyers and sellers and profit margin efficiency is expected to reach about 35 to 50 percent compared to 2021.

Another factor that will affect the yarn industry in 2022 is the final conclusion in the anti-dumping investigation by the Department of Commerce (DOC) which found that US industry is being harmed by imports of polyester textured yarn (PTY) from Indonesia, Malaysia, Thailand and Vietnam sold in the United States at less than fair value. The DOC will therefore impose anti-dumping duty on such imports.

The DOC determined that Vietnam’s Century Synthetic Fiber Corporation had a dumping margin of 2.58 percent, while two other Vietnamese companies will be subject to a tax rate of 22.36 percent.

According to the Ministry of Industry and Trade (MoIT), enterprises that need to export PTY yarn to the US can request the US DOC to review them under a mechanism for new exporters to enjoy a separate tax rate.

For support on the review process and procedures under the new exporter mechanism, enterprises can

contact the Foreign Trade Remedies Handling Office under the MoIT’s Trade Remedies Authority of Vietnam.

Hai Linh