How high can VSF price rise?

After the Spring Festival, as various sectors resume work and production, the trading atmosphere of the viscose industry chain is gradually heating up. Recently, some VSF plants have introduced new sales strategies, and prices have risen to 13,600-13,700yuan/mt (an increase of about 1,000yuan/mt from the pre-holiday lower level). The trading prices are gradually approaching the quotations. Although downstream plants have certain raw material reserves, there is still higher intention to build up stocks. VSF plants are still facing tight delivery schedules, and the industry's logical inventory is around -20 days at present.

The resumption of work in yarn mills is concentrated from the sixth day (Feb 15) to the tenth day (Feb 19) of the lunar calendar. However, it will still take some time for all personnel to return to work and for all equipment to be fully operational. Currently, the industry's operating rate has recovered to about 70%. After the price of VSF becomes clear, yarn mills have gradually released offers. Among them, vortex-spun yarn mills quickly introduced sales policies, with prices for R30S and R40S reaching 17,000yuan/mt and 18,200yuan/mt respectively (an increase of 500-700yuan/mt from the pre-holiday level). However, the resumption of work in fabric mills is relatively slow, and the raw material reserves of traders are relatively sufficient, so the trading volume is not large. Prices for yarns of other techniques have not been published on a large scale, and sporadic quotations have also risen by several hundred yuan per ton.

The opening performance of rayon industry chain after the Spring Festival is good. This is also due to the strong fundamentals. The pre-sale volume of VSF and rayon yarn is relatively abundant, and the tightness of VSF supply continues to exist. In the short term, the strong performance on the supply side is expected to dominate the market, and VSF price may rise to 14,000yuan/mt or even higher. The performance on the demand side still needs further observation, and the yarn exhibition in early March may provide a relatively clear picture. However, although the viscose industry chain has performed well, the performance of cotton and PSF futures has been less satisfied, indicating that the expectations for the forecast of the cotton textile industry are not very positive. Therefore, caution and optimism are needed in specific operations.