Viscose: finding a new path to achieve progress

After the concentrated capacity expansion in 2018, VSF industry has entered a relatively stable period. On one hand, the weak market and high pressure of losses were caused by the explosive supply and delayed demand response. In response to this, VSF companies actively sought high value-added products. On the other hand, there was a rapid increase in the focus on environmental protection and sustainable development in end-user market, which led to increased requirements for aspects such as recycling, low carbon emissions, and biodegradability.

The two hottest directions are lyocell and non-woven fabrics (including fibers and spunlace nonwovens). Chinese lyocell market began to take off in 2019 and the capacity has reached around 400kt/yr to date, with more planned facilities under construction. As the only cellulose fiber supported for development by China, lyocell has a more environmentally friendly production process compared to VSF. However, the higher technological and investment requirements, coupled with the concentrated production resulting in relative oversupply, have kept it under continuous pressure of losses. Although some planned facilities have experienced delays, it is still in a relatively fast development stage overall.

The non-woven fabric has benefited greatly from the surge in demand from the consumer end in recent years. At the same time, the supply side has kept pace, even surpassing the demand quickly. As a result, there is now relative oversupply, leading to a noticeable decline in operating rate and profitability for companies. However, this is undoubtedly positive for nonwovens-grade VSF. As the price difference between nonwovens and textile-grade VSF gradually widens, Chinese VSF companies have shown a preference for producing nonwovens-grade VSF in the past three years.

In addition, fiber companies, benefiting from their raw material advantages, are actively expanding their industrial chain and enhancing their competitive edge. As a result, the enthusiasm for production remains high. Compared to lyocell, non-woven fabric and nonwovens-grade VSF are more friendly in terms of technological requirements, financial investment, equipment, raw materials, as well as profitability and downstream market volume.

One is a similar product to VSF, while the other is a product in the non-traditional textile field. In recent years, the VSF industry may seem to be neglecting its core business, but in reality, it is constantly seeking innovation and change after entering a mature stage.