In the first quarter of 2021, Vietnam’s fiber and yarn industry received good news about export value due to an improvement in demand and an increase in export fiber and yarn prices. Fiber and yarn export output reached 483.7 thousand tons, up 18.2% over the same period. Along with that, the export value grew significantly when reaching USD 1,217.2 million, an increase by 30.6% over the same period –  almost as twice as the export volume.

Source: VIRAC

The outstanding growth of export value was thanks to:

    • Improved demand
      2020 was considered a difficult year for the fiber and yarn industry when exports decreased. Vietnam’s export fiber and yarn prices went down due to the impact of the inherent US-China trade tensions and the Covid-19 epidemic. China, which is the largest export market of Vietnamese fiber and yarn, in 2020 has reduced its demand, directly affecting export turnover.

      Entering 2021, fiber and yarn enterprises have received good news when the demand for yarn increased in China. The demand for yarn in China increased due to the increase in the number of garment orders thanks to the expectation of the recovery of the global economy when the Covid-19 vaccine was widely deployed. China’s garment exports in the first quarter of 2021 reached USD 26.96 billion, up 26.3% over the same period in 2020.

    • The rise  in raw material prices caused the price of fiber and yarn to increase
      The two main raw materials used to produce yarn are cotton and polyester fiber. However, in Vietnam, both of these input materials are mainly imported. The main reason why the supply of cotton comes from imports is the lack of economies of scale in production and the unwillingness of farmers to plant because of low domestic price. Meanwhile, up to now, Vietnam’s oil exploitation projects mainly focus on crude oil extraction and do not focus on the preparations such as PET plastic beads. Therefore, the whole input of polyester fiber – petroleum preparations in Vietnam comes from imports. Therefore, the increase in world prices of cotton and polyester fibers in the first quarter of 2021 has led to an increase in fiber and yarn prices.

      Cotton prices increased due to a decrease in cotton supply and an increase in cotton demand. The decrease in world cotton supply was due to:

(1) Cotton production decreased in most of the world’s main cotton export markets such as the US – declined 26.2%, Brazil – declined 16.5%, India – declined 1.7%.

(2) The Trump administration announced a ban on imports of cotton and cotton products from the Xinjiang area of China, which made garments using cotton in the Xinjiang region prohibited from being sold in stores in the US. US garment factories in China must collect and buy this material from elsewhere. This led to a limited supply of cotton outside of China.

The reason for the increase in cotton demand was that the recent vaccination sessions in some Western countries have raised expectations of a strong recovery among manufacturers and fashion clothes retailers. This caused the number of garment orders to increase, indirectly affecting the demand for fabrics and cotton in the world.

Source: VIRAC

The price of polyester fiber in early 2021 increased sharply due to the increasing price of oil, which was the input material of polyester fiber. OPEC’s low production until April 2021, along with the US’s implementing a stimulus package worth USD 1.9 trillion, have increased the world oil price in the first quarter of 2021.

Source: VIRAC

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