Viscose fiber and spun yarn prices are currently falling over a high level of inventories on the Chinese market where new capacities could further depress prices in the coming period. VSF prices have also been lowered in Pakistan.
Viscose prices have begun more sharply dropping day after day on China’s domestic market whereas also further declining in Pakistan.
Benchmark 1.5D VSF has lost 350 yuan per metric ton or 2.7% in the last seven days.
VSF prices have fallen 700 yuan or 5.2% in four weeks.
Although demand is progressively returning to normal, the market has been slow in recovering after holidays.
More important, inventories would have reached about 20 days, meaning that VSF producers need to offer discounts.
Market prices could eventually stabilize after excess stocks will have been digested.
On the other hand, new facilities are expected to be commissioned in the coming months in China, which could further depress a viscose market structurally confronted with excess supply.
Raw material costs of viscose producers have slightly dropped in the past days but profit margins have however plunged at VSF plants.
As a result, operating rates could be reduced, which would support prices.
In Pakistan, viscose prices have been again lowered with 1.5D VSF dropping 300 rupees to 270 rupees per kilo (-1.1%).
Prices have not dramatically declined so far, thanks to a strong demand from fiber processors.
The current fall of fiber prices is resulting in lower spun yarn prices in China, India and Pakistan, as reflect by charts at the bottom of this report.
Source: Emergingtextiles
