Does rayon yarn market start? –
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Does rayon yarn market start?

2020-09-02 08:11:38 CCFGroup

Recently, rayon yarn market trading sentiment has warmed up slightly. Vortex-spun rayon yarn was the first to rebound, and the price rose by about 1,000yuan/mt compared with that in earlier stage. At the same time, the operating rate of the small and medium-sized mills that have cut or halted production in the early period has also increased (the overall O/R has little impact). Does it mean that the market that has been sluggish for more than half a year is about to improve?

The reasons for the price increase of vortex-spun rayon yarn are as follows.
On the one hand, the price was on the low side. Rayon yarns basically fell unilaterally. Among them, the vortex-spun one was the worst hit. In mid-July, vortex-spun R30S was rumored to be as low as 10,500yuan/mt. At that time, the feedstock price cut was still not clear. That is, feedstock was around 8,600-8,900yuan/mt, if calculated under extreme conditions, the processing difference of vortex-spun R30S was 1,600-1,900yuan/mt. Therefore, demand rebounded amid such a low price.

Will someone buy it if the price is low? Not necessarily. The unilateral decline of the viscose industry chain in the past two years has basically not made all links to touch the bottom. Therefore, no matter traders or downstream mills dare not stock up just because of low prices. Demand recovery attracts more attention. Therefore, sales and price increase of vortex-spun rayon yarn must be affected by supply and demand sides.

On the other hand, supply reduced and demand recovered. Since 2020, due to the continuous sluggish demand and high pressure on sales ratio, yarn mills have showed low enthusiasm to produce goods. At the same time, many capable and resourceful spinners have also turned to produce other varieties, such as polyester yarn and polyester/rayon yarn, especially vortex-spun one, so the output of rayon yarn greatly reduced. The recovery of demand was mainly reflected in foreign trade. Since the export orders gradually recovered in June, orders for exports to India and Brazil have increased significantly in July. Some orders had 1-2 months’ production, and the increase was mainly from vortex-spun ones. Therefore, the rapid recovery of foreign trade demand caused temporary supply shortages and a hefty price rise.

In the past few years, it was the traditional peak season during "Golden Sep and Silver Oct". Due to the seasonal characteristics of products, there will be some orders after the centralized improvement of foreign orders, which will lead to a short-term sharp rise in yarn prices, and also drive the price and sales of other products.

It has been the period of rapid rise of domestic vortex-spun rayon yarn during 2016-2017, and also the period when yarn export has begun to boom. In addition, VSF sales and price rose. The dull season in Jul-Aug has turned into the peak season, and then market turned to be bleak in Oct. From 2018, the impact of concentrated capacity expansion of feedstock and yarns began to appear. Although the yarn price rose by 1,000yuan, the loss of yarn was unprecedented. In fact, if yarn mills did not cut output in earlier stage, orders may not soar.
In summary, attractive low prices and faster recovery of foreign trade orders are the reasons for the increase in sales and price of vortex-spun rayon yarn. However, except for vortex-spun rayon yarn, the prices of other yarns changed little, with only some up by 100-200yuan/mt, and the transaction only slightly improved, so did that of downstream fabric mills and dyeing mills. Therefore, the vortex-spun rayon yarn outshined others but it was not a signal of the market start. However, with the advent of the traditional peak season of Golden Sep and Silver Oct, the demand side will more or less recover. Amid high inventory and the difficulty of rapid recovery of end-users consumption confidence, the price may still be hard to rise, and the mills will hold cautious attitude.