Hanoi (VNS/VNA) - Vietnam'syarn industry faces many challenges in production and export, especiallyto China, one of the largest export markets for local yarn products, accordingto experts.

The Vietnam Textile and ApparelAssociation (VITAS) said that in December 2018 and January 2019, Vietnam's yarnproduction industry had to accept a drop in yarn price to 2.6 USD per kilo, aswell as a kilo of cotton falling to 2.1 USD, to maintain production and keepcustomers.

Normally, in yarn production andtrading, when the gap between raw material buying prices and product sellingprice is 1 USD per kilo, yarn producers can maintain operations. However, fromOctober 2018 until January 2019, the gap was only 50-60 US cents per kilo.Therefore, the yarn manufacturers had to suffer huge losses from their yarnproduction, said VITAS Deputy Chairman Le Tien Truong.

In February 2019, the gap wasnearly 1 USD per kilo with the cotton price at 1.9 USD per kilo and yarn priceat 2.8 USD per kilo. This level was acceptable for the yarn productionindustry.

However, the gap is unlikely tobe sustainable due to the results of the US-China trade negotiations, accordingto the association.

The difficulties faced by thedomestic yarn production industry are partly due to the US-China trade war,because 25 percent of Chinese goods facing taxes when exported to the US includeyarn.

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

Therefore, China’s reduction ofyarn imports due to difficulties in exporting textile and garment products tothe US has affected Vietnam’s yarn production.

Cao Huu Hieu, Executive Directorof the Vietnam Textile and Garment Group (Vinatex), was quoted by theInvestment Review as saying that domestic yarn production faced difficultiesfrom the end of 2018.

In the last quarter of 2018,local producers saw yarn export orders fall and were forced to reduce theexport price of yarn.

Local enterprises expected theyarn market to gradually warm up from the second half of this year, Hieu said.

Truong said enterprises needed tomanage risks to maintain production while waiting for the market to recover.

"When the market hasrecovered and demand returns to normal levels, the producers need fibre fortheir production and storage because they are currently using inventory. Theyarn market is expected to witness strong development after the trade crisisends," he said.-VNS/VNA