SunSirs: Stock Pressure Suspended, Viscose Was Stable and Weak

According to the price monitoring of SunSirs, on October 21, the average ex-factory price of 1.2D*38mm Viscose staple fiber in the whole country was 11,062RMB/t, increasing 0.31% month on month (34RMB/t), basically flat; decreasing 27.70% year on year (4238RMB/t), down sharply. Large manufactures quoted between 11,200-11,400RMB/t, the overall price rebounded slightly, the market turnover atmosphere improved.

The price of domestic cotton linter has been stable with partial decline. The startup rate of oil plants continues to increase, and the supply of cotton linter is increasing. However, the price of imported cotton linter is low, and the manufacturers are more cautious in purchasing domestic linter, which makes domestic cotton linter difficult to recover the price. Most of the cotton oil plants have their own long-term and stable customer sources, and the price drop is limited, and the price of cotton short barrel is stable and weak in the short term.

Under the current market price, the viscose staple fiber can be observed from the following aspects: first, under the current market price, from November 2018 to now, nearly one year, the viscose price loss is very serious, the loss amount is about 1,500RMB/t. At present, the downstream demand for yarn is limited. ‘Gold September and silver October’ has not brought large transactions to the market. Some manufacturers have chosen to make profits less and sell more quantities to ease inventory pressure. Second, as a substitute for viscose staple fiber, cotton has always been the only choice for manufacturers to produce raw materials. In the recent two years, the price of the viscose staple fiber has dropped sharply due to the launch of new capacity, it has been difficult to stimulate demand for a long time. Third, the average daily operating rate of viscose staple fiber is 80%, which used to be 95%, and there is still a lot of capacity to be released. The downstream terminal demand is mainly rigid, which is difficult to boost the market focus in the short time.

The average ex factory price of the downstream human cotton yarn 30S in Shandong Province is 16,550RMB/t, decreasing 2.07% month on month (350RMB/t), decreasing 18.78% year on year (3,827RMB/t). The quotation of middle-end large factory is 15,200-16,000RMB/t, and that of high-end large factory is 16,800-17,500 RMB/t. At present, the stock of yarn and grey cloth market is about 40 days, the supply of human cotton yarn in the downstream Xinjiang is increasing, and the price of others is declining. At present, textile enterprises mainly maintain production and continue to consume stock, and purchase raw materials as they are used. It is very difficult to have the phenomenon of 'golden September and silver October'.

To sum up, analysts from SunSirs believe that domestic cotton linter prices in the upperstream are stable and weak, maintaining a consistent style. At present, although the stock pressure of viscose industry has been relieved temporarily, the output is still increasing in the later period. In the long run, the industry's excess capacity still needs time to digest, and the market continues to adjust weakly. Downstream yarn market inventory is high, therefore, viscose staple fiber prices are stable in the weak in the long term.

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