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Vortex-spun rayon yarn suffers the most serious losses

2022-12-06 08:21:45 CCFGroup

The trading mood of rayon yarn market has been muted since Sep, and panics have been increasing in the spinners day by day when downstream plants have almost reached the agreement of taking holidays ahead of time. If rayon yarn sales stagnate now, the backlog of inventory and funds will be unimaginable. In addition, the bearish expectation for raw materials significantly weighs on the inventory depreciation. Therefore, price decline has become normal among the spinners.

 

So far this month, yarns of various technology have seen sharp price decline and the loss is generally 1,000yuan/mt or even more, except for ring-spun yarn (it is R30S for ring-spun, vortex-spun and open-end yarn, R40S for siro-spun and compact siro-spun yarn below in case of no special remarks). After the loss of compact siro-spun and siro-spun rayon yarn hit new highs in Jun, that of vortex-spun yarn has hit a record high of around 1,400yuan/mt recently (including depreciation and financial expenses).

 

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Even with such huge losses, most of the traders and fabric mills still purchase raw materials to meet the minimal requirements without speculative intentions. It is reasonable for fabric mills and yarn traders to be cautious because of fewer orders and losses. As for traders, the days of account receivable are extending. Bad debt rate, capital efficiency and depreciation are all the factors they are worried. Now the inventory of rayon yarn has risen to 35 days, which is expected to exceed the peak of 2020 before the Chinese Lunar New Year.

 

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When end-user demand continues to be sluggish and intermediate link fails to boost the market, the upstream segments of the industry chain including yarn and VSF almost have no choice but to cut production apart from trying to compete for the remaining market share. However, there is still something worth expecting. First is demand outside China. Buyers in overseas market will generally purchase yarns and fabrics before Chinese Lunar New Year, and the price has also reached the psychological level of some foreign trade customers. Secondly, although traders from China local market have suspended procurement, they will still show buying indication in late Dec or early Jan. However, we cannot express excessively high expectation for the demand.

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