Viscose prices have stopped falling in China, due to a decline of operating rates at fiber plants after margins have disappeared. Material costs are now declining however, as a result of lower demand from VSF producers. Prices could possibly bottom out in a few weeks, according to our short-term price forecast.
Viscose fiber prices have stopped falling in the last seven days in China, after heavily dropping for weeks.
Demand stays relatively weak from downward processors who have still to deal with large inventories.
Offer could have been reduced on the market, after nearly all fiber plants have lost money in the past weeks.
The sharp decline of VSF prices had not depressed material costs until now, meaning that negative margins have appeared in the viscose industry.
Operating rates have therefore been reduced in order to limit the level of losses.
In addition, a chemical plant has exploded in Xiangshui killing about 80 people.
VSF capacities of about 330,000 metric tons are located there, but consequences of the blast are not yet known.
As viscose production is dropping currently, material costs have begun declining, in line with the fall of demand from viscose producers.
Cotton pulp prices have lost 260 yuan per metric ton in four weeks or 3.7%. Wood pulp prices have also begun dropping on the domestic market, although less significantly.
Import prices have however lost 3.5% in four weeks.
This is not yet enough for a rebound of margins at viscose plants.
Operating rates could therefore continue falling until VSF prices will bottom out.
As soon as inventories will have been digested, prices may rise as below indicated.
Source: Emergingtextiles
