VSF Dropped to the Bottom Once Again

 Judged from the price tendency of VSF (Viscose Staple Fiber) in recent months, it steadily increased driven by the feedstocks before the National Holiday. VSF price broke 20,000 Yuan. While after the holiday, the price dropped to 19,000 below. As some of manufacturers restarted the devices that were shut down previously, margins turned better before the National Holiday. However, crisis occurred again after the holiday.

Losses Again VSF Manufacturers Plans to Shut Down Devices

In VSF market, the prices are in disorder by now due to weak demand of terminal markets. The discussions mainly stayed at 19,000-19,200 Yuan on market and some lowers have already reached 18,800 Yuan. With the decline of VSF prices, the manufacturers began to deficit again. According to the present cotton pulp price, the cost of producing VSF reached 12,540 Yuan/ton. In September, VSF manufacturers reported that the machining cost increased to 8,500 Yuan/ton, so the producing cost of 1.5D VSF would be 21,040 Yuan. It can be concluded that the loss of those manufacturers are around 2000 Yuan/ton.

According to the performance reports in third quarter this year, listed companies including Jilin Chemical Fiber, Aoyang Technology and Shandong Hailong predicted loss generally and the range would not be smaller than what was like in second quarter. Among which, loss of Jilin Chemical Fiber is predicted around 125 million Yuan to 165 million Yuan, it is 160 million to 220 million Yuan for Hailong and 380-400 million Yuan for Aoyang. The deficit is severe for the viscose manufacturers and some of the viscose devices are reported to shut down again.

Upstream Feedstocks Decreased

Before the National Holiday, VSF price followed the increasing tendency of linter resulted from cost-oriented effect. While after the holiday, the effect brought by cost-oriented was taken place of demand; linter price was dragged down by the viscose on the contrary and the linter price was getting weaker. At present, linter price is fluctuating around 4,800-5,200 Yuan. Cotton pulp price began to decrease after its deadlock before. Although the guide price which is drafted by the industrial meeting of cotton pulp highly disclosed at 12,000 Yuan this month, the slumping viscose price brought down the sales and led most manufacturers selling the inventories and had less demand for the upstream cotton pulp. Some trades even closed lowly around the price of 11,300 Yuan.

Downstream Market is Weak

In the perspective of downstream market, after the National Day, influenced by the drop of upstream raw materials cotton and VSF price, the rayon yarns market kept weak, and the market trading atmosphere was dull. Many yarn manufacturers reported that the price of rayon yarns 30s woven was 23,400 Yuan/ton and 40s was 24,400 Yuan/ton in Shengze. The price of knitting rayon yarns produced in Fujian was 22,500-22,800 Yuan/ton, but seldom heard of trades. According to many factories, they are suffering losses. If calculates the VSF price by 19,000 Yuan and plus the 5,000 Yuan processing charges, the rayon yarns cost will be about 24,000 Yuan, which varies in 600-1,000 Yuan with the market price. So the losses and cash flow problems may lead the yarns price down again. Moreover, the drop of rayon yarns price also influenced upon the rayon grey fabric market. Currently, the sales volume of grey rayon fabric decreased obviously, and the price sees dropping.