Rayon yarn market loading, please wait and see

A sudden shift in rayon yarn market appeared over the weekend. News of the price rise of both rayon yarn and VSF helped ease the previously bearish sentiment, and there's follow-up and hesitation. Compared with the sharp rise in the second half of last year, there were some similarities and differences. Similarly, higher cotton polyester varieties, ampler liquidity, and better vortex-spun rayon yarns orders. The biggest difference lies in the support of viscose and rayon yarn.

In terms of yarn process, the rise of the cotton polyester varieties boosted the overall market sentiment and expectations, the improvement of vortex-spun rayon yarn orders and the sustained steady performance of compact siro-spun and siro-spun rayon yarns improved the confidence of yarn mills, and the support from funds was motivated enough to push up prices.

As for stronger yarn demand, mainly reflecting in more orders, limited inventory and tight delivery, blended yarns were also included. Vortex-spun, compact siro-spun and siro-spun rayon yarns are the mainstay of production shift to blended yarn like polyester/rayon yarn. Therefore, compared with previous years, pure yarn sales ratio and inventory burden of related enterprises was significantly smaller, and tight spot and higher offer may appear when the order is small. Ring-spun and open-end ones, mainly pure spinning, showed little fluctuation.

The spinners with diversified products and flexible operation had greater initiative, but that was the overstated demand for VSF plants (take polyester/rayon yarn as an example, its VSF proportion accounts for less than 35%). There were still some divergent expectations (the participation enthusiasm was higher in trade link, while yarn and fabric mills acted in caution). It seemed that the biggest support was the capital side (referring to the surge in last year).

Operating rate of VSF plants is now not high and inventory is not at a low level. The impact from the supply side is neutral. If the start-up progress of the rayon yarn market is 70%, then the viscose market is about 50%. Only if the rayon yarn demand actually strengthens, can downstream fabric mills have the confidence to replenish stocks and each link of the viscose industry chain steadily recover.