Why rayon grey fabric hard to gain momentum when raw materials are rising?

Cotton, PSF and VSF prices driven by commodities have increased after the Chinese Lunar New Year holiday. Cotton yarn and rayon yarn have also followed up, but there are great divergences in grey fabrics as cotton and rayon grey fabric is respectively quoted up by 0.3-0.5yuan/m and 0.05-0.1yuan/m. Is it caused by demand or cost difference?

Shandong, Jiangsu, Zhejiang and Shaanxi-based companies reflect that there are no big differences in cotton and rayon grey fabric sales after the holiday. Trades are generally thin at present and large-scale plants have almost resumed normal operation, but the operation of some small and mid-sized ones is still recovering. There were more enquires on the market recently, but trades are limited since cotton weavers are still fulfilling pre-holiday contracts with less fresh business. Why is there bigger increase of cotton grey fabric than rayon grey fabric? It is mainly driven by cost. Grey fabric production is dispersed without high threshold and producers have weaker attitude in price negotiation, so the price of grey fabric is largely spurred by cost instead of downstream demand recovery.

The mainstream price of VSF has gained by more than 1,000yuan/mt to 13,000yuan/mt since New Year's Day and cotton 3128 has also risen from 22,300yuan/mt to 23,000yuan/mt. Besides price difference between cotton and VSF, there is huge price gap between cotton yarn and rayon yarn as the former has increased by more than 1,000yuan/mt after the holiday, while the latter is just quoted up by 300-500yuan/mt and there is even smaller growth of trading price. C32S has risen from 28,500yuan/mt to 29,700yuan/mt, while R32S just climbs up from 18,000yuan/mt to 18,300yuan/mt.

In conclusion, grey fabric demand has not thoroughly recovered. Although enquiries have increased with rising offers, trades are generally limited. Besides demand difference, cost has pushed up cotton yarn whose price gains much bigger increase versus rayon yarn after the holiday.