Can VFY get further support from export market?

In a sluggish textile market, VFY is one of the few varieties that is less stressed, and export market is still the most important support.

From Jan to Jul this year, the monthly export volume of VFY is generally above 7kt, except that of Feb. The cumulative export volume has reached 61kt, an increase of 25% over the same period last year, and it has exceeded the historical annual export of 2020 and that before the COVID-19 outbreak. The customs data shows that VFY export of China in Jul is 8.914kt, an increase of 30% year-on-year and a month-on-month increase of 17.3%. It can be seen that the demand for the traditional peak season in the second half of the year has begun to exert force, and we can expect better performance afterwards. The export of VFY is expected to exceed 100kt this year.

In addition, the export price has also rapidly rebounded to around $6,000/mt after falling by almost ten years, but the main driving force is the rise of raw materials, and the actual profit of VFY companies has not changed much. VFY has always been highly dependent on export market. In past years, the monthly export volume of about 5kt accounted for 1/3 of the monthly output. Others were mostly processed into fabrics for export. The export volume started to reach around 8kt since 2021, getting close to 9kt from Jan to Jul this year. The proportion of direct VFY exports has risen to 55%-60% of the monthly output.

Since the global VFY capacity is basically concentrated in China, and the overall scale of the industry has been relatively stable in recent years, which means that the demand for VFY in overseas markets has not changed much. The main change is that the downstream production and processing of VFY has gradually shifted to Southeast Asia, which is similar to the situation faced by other varieties, and the possible impact of this trend on the long-term development of the industry needs further observation.