Vietnam Cotton and Products Update

Transcription

1 THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Required Report - public distribution Vietnam Cotton and Products Update 2013 Approved By: Dwight Wilder Prepared By: Truong Minh Dao 11/27/2013 Date: GAIN Report Number: VM3064 Report Highlights: Post reduces the estimate of Vietnam's 2012/2013 cotton production to 3,608 metric tons (equivalent to 17 thousand bales) from the previous estimate of 4,590 metric tons (21 thousand bales) due to unexpectedly lower planted area of cotton. Cotton imports in marketing year (MY) 2012/2013 reached a record of 525,000 metric tons, a year-on-year increase of 48.6 percent, thanks to cotton spinning mill expansion and strong exports of yarn. U.S. cotton, for the seventh consecutive year, continues to take the biggest share (about 37 percent) of Vietnam s cotton imports. Although it is still early to provide a forecast on Vietnam s cotton production and trade for the next MY (2013/2014), post forecasts that Vietnam s cotton production continues to decrease further due to the low price trend of cotton lint, competition from other crops, and no changes to Vietnam s biotechnology policy. Due to strong cotton demand from spinning mills, MY2013/2014 cotton imports are projected to reach 567,000 metric tons or 2,600 thousand bales. Post: Hanoi

2 Author Defined: SITUATION AND OUTLOOK Textile Industry: Note: the report VM3017 is still valid. According to the Vietnam Textile Apparel Association (VITAS), Vietnam is now ranked among the world s top five textile, garment, and apparel-exporting countries. Despite the global economic downturn, Vietnam exports of textile, garment, and apparel continued growing in the first 10 months of 2013, reaching a value of $14.8 billion -- an increase of 18.5 percent over the same period of 2012 (Source: Vietnam Customs Office). Cotton Market Post reduces the estimate of MY 2012/13 cotton lint production to 3,610 metric tons (mt) or 17 thousand bales, a sharp decline of 29 percent compared to MY 2011/12, as low cotton prices and strong competition from other agricultural crops (i.e. cassava and corn) will reduce planted area. Due to current low cotton price trend and the delay in allowing BT cotton seed cultivation, the production in MY 2013/14 is forecast to decline further by 10 percent to be at 3,250 metric tons or 15 thousand bales. Vietnam s cotton development plan seems to be out of reach due to consecutive decline in cotton planted area in recent years. In brief, Vietnam will continue to rely heavily on cotton imports to fulfill its cotton needs. Post also revises the MY 2012/13 cotton imports to 525,000 mt or 2,408 thousand bales, an increase of more than 48 percent over MY 2011/12. This growth is attributed to the expanding cotton spinning sector and continued strong exports of Vietnamese cotton yarns to overseas markets, especially China. In 2012, Vietnam imported 416,000 mt of cotton, a year-on-year increase of 27 percent, thanks to strong demand for cotton yarns in international markets. Vietnam sourced 126,600 tons (about 30 percent) of its total cotton imports in 2012 from the United States, making it the 4 th largest market for U.S. cotton at a value of $248 million. In fact, in terms of value of imported U.S. cotton, Vietnam has just jumped from the 7 th largest market in 2011 to the 4 th largest market in 2012, surpassing Indonesia, Korea, and Thailand. In the first 9 months of 2013, U.S. cotton exports to Vietnam reached a record of 185,000 mt, a year-onyear increase of over 100 percent. The United States remains the number one cotton supplier to Vietnam, with a 43 percent share of total Vietnam cotton imports in the first three quarters of Table 1: Vietnam s Cotton Production, Supply and Demand

3 Cotton 2011/ / /2014 Vietnam Market Year Begin: Market Year Begin: Aug Market Year Begin: Aug Aug 2013 USDA New USDA USDA New New Post Official Post Official Official Post Area Planted Area Harvested Beginning Stocks Production Imports 1,625 1,624 2,425 2,408 2,700 2,600 MY Imports from U.S Total Supply 1,990 1,989 2,786 2,734 3,207 3,102 Exports Use 1,650 1,680 2,300 2,247 2,650 2,530 Loss Total Dom. Cons. 1,650 1,680 2,300 2,247 2,650 2,530 Ending Stocks Total Distribution 1,990 1,989 2,786 2,734 3,207 3,102 Stock to Use % Yield TS=TD Comments AGR Number VM3064 Comments To Post Source: FAS, Official USDA Estimates, post estimates Note for unit measures: Planted area/harvest area: 1,000 ha Stocks/Production/Imports/ MY imports from U.S/ Total Supply/Exports/Use/Total Domestic Consumption/Ending Stocks/Total distribution: 1,000 bales (480-lb bale equivalent to 218-kg bale) PRODUCTION (see Tables 2 and 3 for details) -VVietnam s Cotton Production in 2012/2013 and 2013/2014 Post reduces its estimate of MY 2012/13 cotton lint production to 3,610 mt or about 17 thousand bales, a decline of 29 percent compared to the previous year as low cotton prices and strong competition from other agricultural crops (i.e. cassava and corn) resulted in a reduction of planted area. It is still quite early to provide a forecast for the next Marketing Year (August July 2014). However, with current low cotton price trends (compared to other agricultural crops, i.e. cassava and corn) and the delay in allowing BT cotton seed cultivation, Vietnam s cotton production forecast for MY 2013/14 is initially set for a further decline of about 10 percent from the current crop. The Vietnam cotton development plan seems to be out of reach due to consecutive decline in cotton planted area in recent years. In brief, Vietnam will continue to rely heavily on cotton imports to fulfill its cotton needs

4 Table 2: Vietnam s Cotton Production (from 2011/12 to 2013/14) 2011/ /13 % change 2012/13 vs 2011/ /14 (Projected) Crop area (THA) Crop yield (MT/HA) Seed cotton production (TMT) GOR (%) Cotton fiber production (TMT) Bales Equivalent Quantity (1,000 bales, 218kg/bale) Source: MARD, GSO, other trade sources and Post s projection Table 3: Vietnam s cotton production estimates by region, * 2013* Growing Regions Area Yield Prod. Area Yield Prod. Area Yield Prod. THA MT/HA TMT THA MT/HA TMT THA MT/HA TMT North East North West North Central Coast South Central Coast Central Highlands South East Mekong River Delta Total Vietnam Source: MARD; General Statistics Office (GSO); and other trade sources. Note: Prod.: Production THA: Thousand Hectares MT/HA: Metric Ton per Hectare TMT: Thousand Metric Tons (*): estimates TRADE Vietnam Cotton Imports by Marketing Year: Table 4: Vietnam s Monthly Cotton Imports (MY2010/11 and 2012/13) 2010/ / /2013

5 Qty (1000MT) Value ($million) Qty (1000MT) Value ($million) Qty (1000MT) Value ($million) Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul TOTAL 343 1, ,030 Average price (USD/kg) Sources: Vietnam General Statistic Office, Vietnam Customs Department, and other trade sources. According to table 4 above, in MY 2012/2013, Vietnam imported a record of 525,000 tons (or 2,408 thousand bales) of cotton, valued at U.S.$1.03 billion, a sharp increase of over 48 percent in quantity and 18.7 percent in value over the previous year. It is still early to provide a forecast for Vietnam s cotton imports for the next marketing year (2013/2014). However, given the expanding cotton spinning sector, strong exports of yarn, and low price trends (relatively lower prices in comparison with prices in the recent months), initially, Vietnam s cotton imports in 2013/14 are forecast to continue increasing to reach 567,000 tons (or 2,600 thousand bales). Vietnam Cotton Imports by Calendar Year: As a result of strong demand for cotton yarns from international markets, especially China, Vietnam s cotton imports in calendar year 2013 will likely be another record. The imports in the first 9 months of 2013 were already 434,000 tons, worth U.S.$870 million, an increase of 45 percent in quantity and 13 percent in value over the same period of last year. Vietnam s Primary Cotton Suppliers According to the report from the Vietnam Ministry of Agricultural and Rural Development, in the total cotton imports of 434,000 tons in the first 9 months of 2013, the United States remains the number one cotton supplier to Vietnam, with more than a 43 percent share (note: this will likely mark the seventh consecutive year that the U.S. is the leading supplier of cotton to Vietnam -- for calendar year 2013). India ranked second with a share of 20.5 percent, and Australia become the third largest supplier with 5.2 percent of the market. Other major suppliers include African countries, Brazil, and Pakistan. Table 5: Import Trade Matrix (unchanged) Country: Vietnam Commodity: Cotton

6 Unit: Metric Ton Time Period Imports for: U.S. 132,900 U.S. 133,200 U.S. 126,600 Others Others Others Africa 71,339 Africa 50,000 Brazil 60,200 India 65,917 India 43,000 India 57,000 Brazil 14,893 Brazil 29,000 Pakistan 53,850 Australia 10,364 Pakistan 17,400 Africa 25,000 Pakistan 10,300 Australia 10,800 Australia 24,700 Malaysia 4,647 Malaysia 10,000 Malaysia 10,000 CIS 4,030 Argentina 5,800 Argentina 4,350 Argentina 2,537 China 2,700 China 676 Mexico 1,070 Mexico 1,850 Mexico Taiwan 950 Taiwan 1,100 Taiwan 2,240 Total for Others 186, , ,016 Others not Listed 33,953 22,150 51,384 Grand Total 352, , ,000 Source: Vietnam Customs Department; MARD; World Trade Atlas, Traders & Post s Estimates Table 6: U.S. Cotton Exports to Vietnam by Grades Quantity in Metric Ton Marketing Year: August-July versus 2012 Product Aug-Jul Aug-Jul Aug-Jul Aug-Jul % Change CT,NT PMA,> ,331 50,002 30,422 96, CT,>25.4,< , ,498 79,892 94, RAW CTTN,<25.4 3,977 2,649 2,845 3, PIMA,ETC,> ,322 3, COTTON LINTERS Total Cotton 111, , , , Source: Department of Commerce, U.S. Census Bureau, Foreign Trade Statistics Table 7: U.S. Cotton Exports to Vietnam by Grades Value in thousand U.S. dollars Marketing Year: August-July versus 2012 Product Aug-Jul Aug-Jul Aug-Jul Aug-Jul % Change CT,NT PMA,> , ,511 74, , CT,>25.4,< , , , , RAW CTTN,<25.4 9,271 7,111 8,435 6,

7 PIMA,ETC,> ,413 9, , COTTON LINTERS Total Cotton 171, , , , Source: Department of Commerce, U.S. Census Bureau, Foreign Trade Statistics U.S. cotton exports to Vietnam during August 2012-July 2013 reached nearly 195,000 tons for a value of $350 million, a sharp year-on-year increase of 72 percent in quantity and 41 percent in value. U.S. cotton made up 37 percent of total cotton imports in MY 2012/2013. Post believes U.S. cotton exports to Vietnam in the next MY 2013/14 will likely reach a new record. CONSUMPTION Vietnam s domestic cotton consumption continues to increase in order to meet strong demand from its expanding textile industry. Demand for yarns is strong, mainly for exports (especially China), but also for domestic markets. Foreign-invested spinning mills have been the major driving force for higher demand of cotton in Vietnam in recent years. Many of them have quickly expanded their spinning capacity. It is reported that Tainan Vietnam (a Chinese invested company) has completed spinning capacity for 520,000 spindles, which could drive its cotton need to over 66,000 tons a year. Texhong Vietnam (a Chinese invested company), has operated in Vietnam since 2007, with its first phase being a huge spinning mill in Dong Nai. The company has just completed the second phase of its spinning expansion plan in Quanh Ninh Province in July With its capacity of about 700,000 spindles and 15,200 rotors, Texhong likely needs about 200,000 tons of cotton per year. Recently, Kyung Bang (a Korean-invested company) finished setting up a new mill in mid The mill is equipped with Rieter machinery --totaling about $40 million of investment. The first phase is a 26,000-spindle mill producing 100% cotton high quality yarns for knitting. It is reported that KB has also planned for a second phase and third phase expansion. Many Vietnamese-owned spinning mills have also expanded. Phu Bai Spinning Mill (PB) is testrunning a new 15,000-spindle mill. The mill is for 100% cotton use. It is reported that PB is working on setting up another new mill for 15,000 spindles. Hanosimex is opening a new 30,000-spindle mill. To reflect stronger-than-expected exports of yarn to overseas markets, especially China, Post revises estimated domestic cotton consumption for 2012/13 to 490,000 tons, equivalent to 2,247 thousand bales. Please see the PS&D Table (table 1) for more details. As China buyers have still been actively purchasing yarns from overseas (note: experts believe it will not last for long), Vietnamese yarn exports continue increasing during , Post revises its forecast of cotton consumption for 2013/2014 to 550,000 tons or 2,530 thousand bales. STOCKS Although interest rates on bank loans have been recently softened to be around 10 percent a year, minimizing costs by reducing carry-over stocks of cotton is still important for the cotton spinning business while maintaining consistent supply. Ending stocks in 2012/2013 and in 2013/2014 are

8 estimated at 487 thousand bales and 572 thousand bales, respectively, with a stock-to-use ratio of 22 percent and 23 percent. PRICES Table 4 above illustrates a decline in average monthly cotton import prices in 2010/2011; 2011/2012; and 2012/2013. The average import price for 2012/2013 was $1.96/kg, a decrease of 20 percent in comparison to the average import price in 2011/2012. Domestic Prices (unchanged) CONSUMPTION OF VALUE-ADDED COTTON PRODUCTS: According to the World Trade Atlas, in the first 8 months of 2013, Vietnam exported about U.S.$790 million of yarns to overseas markets, a year-on-year increase of 26 percent. Most of the yarns for export are classified under Harmonized System Codes MARKETING/POLICY (unchanged) Note: For more updated information on agricultural biotechnology in Vietnam, please refer to the Vietnam Agricultural Biotechnology Report VM3062.