Cheaper Raw Material Imports Weighs on Indian VFY Prices in January 2024

Viscose Filament yarn (VFY) has witnessed a notable decline in prices in the Indian market of around 4.14% in January 2024. This price reduction is primarily attributed to the low demand in downstream industries as well as cheaper raw material costs. This trend of PFY has significantly impacted the dynamics of the textile industry in India, flashing opportunities and challenges for manufacturers, suppliers, and consumers.

As per the report of Aditya Birla Grasim Industries, the largest manufacturer of VFY in India and third largest globally, the primary factor driving the decrease in viscose fiber yarn prices in the Indian market is the accessibility of cheaper raw materials from China. As per the statement of the Chief financial officer of Grasim Industries in the Q3 earnings conference call, VFY price was reduced due to the lack of demand in the downstream industry mainly for embroidery and georgette and home furnishing items. On the other hand, Cheaper raw material imports from China have largely impacted the Indian VFY market. Caustic soda prices on a year-on-year basis have also sharply declined from USD 450/MT to USD 400/MT due to which the market remains oversupplied due to large capacity additions in FY2023 financial year. As per the Managing Director of Grasim Industries, VFY business remained slower in the third quarter (October to December) than the second quarter, but business grew overall on a year-on-year basis.

VFY consists of three types i.e. Spool Spun yarn, Continuous spun yarn and Pot spun yarn with different properties and segments. Spool spun yarn and continuous spun yarn segments performed quite well, demand from the downstream has been maintaining stable during the timeframe. Eventually, the Pot spun yarn market remained affected due to the certain areas of garments which are not picking up or did not have the seasonal pickup. Adding to difficulties, Grasim Industries Kalyan (Maharashtra) based Plant was marked down due to operational disruption.

Amidst the difficulties, the competitive pricing of Chinese raw materials has exerted downward pressure on the prices of VFY in the Indian market. Manufacturers importing raw materials from China could manufacture the product at a lower cost, allowing them to offer more competitive prices to consumers.

VFY, renowned for its versatility and affordability, holds a prominent position in the global textile market. However, the cost of production plays a crucial role in determining its competitiveness. India has been a key player in the production of VFY, with a strong manufacturing infrastructure, the industry holds itself on a robust production capability.

In conclusion, the decrease in viscose fiber yarn prices in the Indian market, driven by cheaper raw material imports from China, lower demand, and operational disruption affects the dynamics of the Indian as well as global textile industry. Further, it is anticipated that the prices might not start to incline before the peak seasonal demand, which is expected to hit the market as summer has started to arrive.