Viscose fiber prices have begun significantly falling in the last seven days in China, after staying frozen for a large number of weeks. Excess inventories are pressuring the market and demand has not yet rebounded to levels usually observed in this period of the year.
Viscose staple fiber prices have begun dropping in the last seven days in China, over a too large amount of inventories at VSF plants.
Benchmark 1.5D has lost 280 yuan per metric ton in a single week or 2.1%.
From 13,450 yuan on Feb 26th, prices have fallen to 13,100 yuan this Thursday.
By contrast, polyester fiber prices are now rebounding in China.
Excess supply
The current fall is actually due to a rise of production in the second half last year after new capacities have been added.
Production capacities have reached 4.75 million metric tons at the end of last year with production climbing to 3.7 million in full 2018.
With demand more or less stagnating, inventories have significantly increased at VSF plants.
Viscose producers are now trying to eliminate these stocks.
Demand is however expected progressively rebounding and prices could bottom out after inventories will have been digested by the market.
Raw material costs of viscose producers have begun dropping in the last days, meaning that margins should not tumble.
As producers will therefore not lower their operating rates, prices may continue falling in the coming period.
VSF prices also falling in Pakistan
Viscose spun prices should also be reduced in the coming days, after fiber prices have fallen.
In Pakistan, viscose fiber prices have also begun declining after progressively rising for weeks.
Spun viscose prices could rapidly follow the same trend, as already observed in the last weeks in India.
Source: Emergingtextiles
