Why is rayon grey fabric hard to move up despite rising VSF and rayon yarn? – ChinaTexnet.com
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Why is rayon grey fabric hard to move up despite rising VSF and rayon yarn?

2020-09-17 10:27:09 CCFGroup

Recently, VSF and rayon yarn saw a significant rise, most of which was more than 300-500yuan/mt, while vortex-spun one rose by over 1,000yuan/mt. Rayon grey fabric market enjoyed tolerable sales and some varieties edged up, but the overall growth was still relatively weak. Why did VSF and rayon yarn pick up but rayon grey fabric move down? Where will the future market go?

1. Amid volatile macro circumstances, price is hard to climb up.
Amid COVID-19 outbreak and US election year, Sino-US relation is complex and changeable. In addition, after the Sino-India border dispute on May 6 and Sep 7, the situation seems to escalate again.

Therefore, at a time of turmoil in multilateral relations between China and the United States, China and India, China and Canada and China and Australia, the risks in the export market have increased (US media reported that the trump government is considering the sanctions on Xinjiang cotton looms and announced that it will ban some or all textile and apparel products made from cotton in Xinjiang). So far, rayon grey fabric export market has recovered to 60%-70% in the same period last year, and it is difficult to return to normal.

2. Amid overall soft demand, priority shipment becomes the first choice.
After a long period of unilateral downward trend, the production cost of grey fabric has been increased since the end of July and the beginning of August, driven by the rising prices of VSF and rayon yarn market, as well as the expectation of the traditional peak season of "Golden Sep and Silver Oct" in the textile and apparel market, the seasonal demand of rayon grey fabric market slightly turned better and the trading sentiment warmed up somewhat. The overall order volume, however, was still small, and large one was still less.

In addition, with the arrival of "Golden Sep and Silver Oct", from end-July to early-August, the fabric mills in Shaanxi, Shandong Gaomi, Jiangsu and Zhejiang who had early high-temperature leave have resumed output recently, the operating rate has increased again, and the social inventory of conventional products has risen. Their funds were tight and they put priority on sales with stable price. Driven by the cost, the price moved up, some of which rose by 0.05-0.10yuan/m. Among them, the price of open-end and vortex-spun rayon grey fabric went up, while that of ring-spun one changed little.

To sum up, driven by the rising price of upstream feedstock and under the expectation of "Golden Sep and Silver Oct", the seasonal demand of rayon grey fabric market improved, and the orders slightly recovered. However, as the orders were thin and customers forced price down, fabric mills put priority on sales for destocking conventional products, and the actual traded price was hard to rise. The fabric mills intended to quote up amid rising feedstock, however, under the epidemic and macro circumstances, the fabric mills were short of funds and actual sales ratio did not move up significantly. During the National Day holidays, there will be plans to take turns or stop work for holidays.