USDA – Vietnam Cotton and Products Update and Commodity Report 2018

Report Highlights

Post estimates Vietnam’s cotton imports in marketing year (MY) 2017/2018 up to 1.5 million metric tons (MMT), a 26 percent increase over MY16/17, as Vietnam’s spinning sector continues to expand alongside its textile and garment industry. In MY18/19, FAS/Vietnam forecasts Vietnam’s cotton imports up 10 percent over the previous year. U.S. cotton continues to dominate the Vietnam market, accounting for 48 percent in MY17/18

Situation and Outlook

Textile IndustryVietnam’s textile and garment sector is growing steadily and remains one of the county’s top export industries, significantly contributing to the country’s Gross Domestic Product (GDP) growth. Vietnam Textile and Garment Association estimates that export revenue in calendar year (CY) 2018 will reach USD 36 billion, up about 14 % over the previous year.

The escalating trade tensions between the United States and China has given Vietnam an opportunity to increase apparel exports to the United States. In anticipation of potential punitive tariffs, there have been movements of orders and production facilities from China to Southeast Asia, including Vietnam. Garment exports from Vietnam to the United States reached USD 12.4 billion in the first 11 months of CY18, up 9 % over the same period last year.

When the ongoing trade tensions between the United States and China began, the spinning community in Vietnam was seriously concerned about a possible decline in exports of Chinese garments to the United States, which could have potentially led to lower cotton yarn imports from Vietnam. However, the trade tensions has not yet adversely affected Vietnam’s cotton yarn exports to China. In fact, Vietnam Customs data shows that cotton yarn exports to China will reach about 780 thousand metric tons (TMT) in CY18, up 9 % over CY17. Investment inflows from both foreign and domestic sources into the textile and garment industry generally, and the spinning sector specifically, continued to grow in 2018.

In CY18, Post estimates Vietnam’s total yarn exports at 1.45 MMT, up about 7 percent over the previous year, of which approximately 1.05 MMT were cotton yarns (HS 5205 and 5206). China, South Korea, and Turkey remain the largest importers, comprising over 80 percent of Vietnam’s total cotton yarn exports. The decline in exports to Turkey was more than offset by higher exports to China and South Korea (see Table 2 and Figure 1). Vietnam will continue to maximize the advantages offered by geographic proximity, competitive cost, and the benefits conferred by FTAs to attempt to boost yarn exports to all three markets.

Vietnam also imports yarn for its weaving and knitting industry. Most of the imports are man-made. Vietnam’s cotton yarn imports are insignificant compared to total yarn imports, reflecting an improving supply of domestic cotton yarn (see Table 3).


Vietnam’s cotton planted area continues to shrink to an insignificant amount. FAS/Vietnam estimates domestic cotton supply at less than 1 percent of total market demand. For a further discussion of the decline in planted area, please see GAIN Report VM7019: Cotton and Products Annual 2017.


Post revises Vietnam’s cotton imports in MY17/18 to 1.50 MMT, or just over 6.9 million bales, up 26 percent over MY16/17, due to higher exports of cotton yarns to China and South Korea. For MY18/19, based on the recent developments in the textile and apparel sector noted above, Post forecasts imports at 7.6 million bales or 1.66 MMT, a 10 % increase over MY17/18.

Vietnam’s Top Cotton Suppliers

The country’s top five cotton suppliers are the United States, India, Brazil, Australia, and Cote d’Ivoire. These countries make up 70 to 80 percent of the total cotton supply to Vietnam.

The United States has topped the list of cotton suppliers to Vietnam for nearly a decade. In MY17/18,

U.S. cotton exports to Vietnam hit a record-breaking volume of 730000 MT or roughly 3.35 million bales, valued at about USD 1.24 billion. This was a year-on-year increase of 13 % in quantity and 16 % in value. The vast majority (over 90 %) of U.S. cotton imported into Vietnam is upland cotton.

In MY18/19, FAS/Vietnam forecasts that U.S. cotton exports to Vietnam will continue to grow 10 percent, reaching about 803,000 MT or 3.68 million bales. As in previous years, the U.S. cotton success story in Vietnam is based on various factors, including:

•             Vietnam’s cotton imports increased strongly to feed a growing demand for cotton yarn from both the domestic and export market, most notably from China and South Korea.

•             Major spinners in Vietnam representing Chinese, Taiwanese, and Korean investments continue to favour U.S. cotton for its stability, quality, availability, and price competitiveness.


Vietnam’s cotton consumption continues to increase to meet the growing demand for cotton yarn from export markets, most significantly China, South Korea, and Turkey. FAS/Vietnam estimates that 80 percent of imported cotton was spun into cotton yarn (HS 5205, 5206) for export, while the rest was made into yarns of various types for domestic consumption. There are no records of cotton re-exports. Vietnam’s cotton consumption heavily depends on China’s demand for cotton yarn, while domestic consumption of cotton yarn is less robust. Overall, China’s policy of favoring imports of cotton yarn from Vietnam while reducing imports from India and Pakistan increased Vietnam’s cotton consumption in MY17/18.

In MY18/19, FAS/Vietnam forecasts Vietnam’s cotton consumption at 7.5 million bales or approximately 1.64 MMT, up about 10 percent over MY 2017/18, due to recent developments in the textile and spinning sector.


Average prices have rebounded from lows in MY15/16 and have been at comparatively high levels throughout MY17/18 (see Table 7).


Since the global supply of cotton is estimated to be larger than in previous years, local importers can easily and competitively source cotton and do not need to keep large stocks. Spinners have reduced stocks for production from 60 days to 45 or even 30 days. FAS/Vietnam estimates that the stocks-to- use ratio in MY17/18 varied between 15 and 17 percent.

Marketing / Policy

Tariff on cotton

Cotton fibre (HS code 5201, 5203) has a zero tariff, but a 5 percent value added tax is assessed.

Tariff on cotton yarn

Cotton yarn (HS codes 5204, 5205, 5207) has a 5 percent tariff, and a 10 percent value added tax.

Biotech Policy and Cotton Production

Commercialization of biotech cotton is not yet approved in Vietnam. However, confined field trails for biotech cotton are authorized. To date, field trials have not been conducted. For more information on agricultural biotechnology in Vietnam, please refer to GAIN Report VM8051

Production, supply and demand data statistics