According to statistics from the Vietnam Textile and Apparel Association, Vietnam’s textile and apparel exports in 2020 were US$25 billion, a year-on-year decrease of 10%, the first negative growth in 25 years.
The new crown epidemic has caused huge damage to the country’s textile and apparel industry. In the first quarter of 2020, China’s customs blockade caused a shortage of raw materials in Vietnam. Starting in the second quarter, Vietnam’s exports to many regions, including Europe and the United States, suffered heavy losses. 60% of Vietnam’s imported raw materials come from China, and exports to Europe and the United States also account for 60% of its exports. Therefore, the epidemic has dealt a huge blow to Vietnam’s textile and garment industry. Recently, the shipping container supply crisis has brought new impacts to Vietnam’s textile and clothing exports. The skyrocketing sea freight and transportation delays have led to a significant increase in production costs and a large accumulation of warehouse products, affecting the capital flow of enterprises.
From the current perspective, due to the increasing spread of the new coronavirus epidemic, global clothing demand is still uncertain. Vietnam is paying close attention to the trends in China’s relations with Europe and the United States. Previously, the Vietnam Textile and Apparel Association’s goal was to reach US$39 billion in textile and apparel exports in 2021, but there are three conditions for achieving this goal: first, Europe and the United States can control the epidemic, second, China continues to purchase Vietnamese cotton yarn, and third, domestic companies can seize the opportunity Opportunities brought by free trade agreements.
Due to the uncertain market outlook, many yarn mills in Vietnam have delayed investment opportunities, and there will be no new factories in 2020. The country’s yarn production capacity is expected to remain at the level of 8.25 million spindles in 2019 .
According to Vietnam Customs data, Vietnam’s total yarn exports in 2020 were 1.74 million tons, a year-on-year increase of 1.2%. Cotton yarn is still the main export variety, accounting for 60% of all exports. In 2020, Vietnam’s cotton yarn export volume was 1.05 million tons, a year-on-year decrease of 4%. Due to the decline in cotton yarn prices, cotton yarn exports were US$2.5 billion, a year-on-year decrease of 11%. In 2020, Vietnam exported 944,000 tons of cotton yarn to China and South Korea, accounting for 90% of total cotton yarn exports. Cotton yarn exports to China began to recover in June 2020.
The sharp fluctuations in cotton prices in 2020 have made Vietnamese companies cautious about signing forward US cotton import contracts and Chinese cotton yarn export contracts. To reduce risks as much as possible, Vietnamese yarn mills tend to sign short-term contracts (1-3 months). Since Vietnamese cotton yarn is mainly exported to China, any changes in China’s cotton and cotton yarn demand and policies will have an impact on Vietnam’s cotton consumption. In 2019/20, Vietnam exported 867,000 tons of cotton yarn to China, a year-on-year increase of 7%, accounting for 83% of Vietnam’s total cotton yarn exports. In the first half of the 2020/21 year, China’s cotton yarn imports from Vietnam continued to grow. The U.S. Agricultural Counselor predicts that Vietnam’s cotton yarn exports to China will increase by 10% throughout the year and will continue to grow in the 2021/22 year. </p
