Textile raw material prices soared by 90 percent in half a year

by Zhao Xinhua

From 8，300 yuan per ton in August last year to nearly 15，800 yuan per ton， the price of viscose staple fiber soared by nearly 90 percent in half a year！ Viscose staple fiber is currently quoted at 15，500 yuan/ton-15，800 yuan/ton， an increase of more than 4，000 yuan/ton year-to-date.

The overall textile industry has recovered， overseas demand has increased， and the traditional peak season for chemical fibers has arrived. At present， domestic viscose staple fiber production and sales companies are booming， and inventories are at low levels.

The viscose fiber industry has experienced a long period of downturn. With the increasing competition， companies with small production capacity and weak financial strength have gradually withdrawn， and a group of weak companies have been mergers and acquisitions integration of enterprises.

In 2020， the total production capacity of Chinas viscose staple fiber industry was about 5.21 million tons per year， with an output of 3.812 million tons， and the annual capacity utilization dropped by 10.5 percent to 73.2 percent， according to statistics.

The turning point occured in the second half of 2020. On the one hand， viscose staple fiber export demand is good after August. In 2020， domestic viscose staple fiber exports are 364，000 tons， an increase of 3.0 percent year-on-year； on the other hand， viscose staple fiber downstream textile exports are good， in January-December 2020， Chinas export of textiles and apparel was USD 291.22 billion， a year-on-year increase of 9.6 percent. Among them， in December last year， Chinas textile and apparel exports amounted to USD 26.2 billion， an increase of 6.6 percent from the previous month.

Is there any room for viscose staple fiber to continue to rise in the future？ Many institutions are offering optimistic forecasts.

For the cost， the current cotton price is around 16，200 yuan/ton， which is still near the cost line. There is still room for price increase. The cotton-viscose spread is expected to continue to narrow. Downstream cotton yarn prices will rise sharply， and the downward transmission of prices will be smooth.

For the demand， about 60 percent of the downstream of the viscose staple fiber is rayon yarn. Affected by the pandemic， the demand for spunlace nonwovens has increased significantly， driving the demand for viscose staple fiber to recover.

For the supply， there is almost no expectation of new production capacity in the industry in 2021. Excluding long-term shutdown capacity， the production capacity of viscose staple fiber is expected to be reduced to 5.085 million tons in 2021.

Guosen Securities believes that the current domestic stock of viscose staple fiber is only about 5 days. It is the traditional peak season for chemical fiber after the Spring Festival. In addition， there will be no new production capacity for viscose staple fiber in the next year， and the price of viscose staple fiber is expected to continue to rise.