Chinese Viscose Staple Fiber Market Continues to Trend Downward as Demand Recovery Softens

China: The price trend for Viscose Staple Fiber (VSF) continues its downward trend in the Chinese market as the supply surpasses the actual demand. This was supported by the slowdown in orders towards the end of the year 2022, as downstream demand declined, which caused plants in China to halt their operations. Major VSF manufacturers were also forced to lower their prices to encourage customers, but consumers and buyers were unwilling to reorder.

In Shanghai, VSF 1.2D price witnessed a reduction by USD 10/MT, with prices hovering at USD 2015/MT on a FOB basis.

According to the market sources, the weak demand is hard to change, and inventories are piling up in the region. The VSF industry presently has crossed more than 200 kt of inventory, which is likely to increase to more than 280 kt by the end of December 2022 and possibly to more than 450 kt after the Chinese Lunar New Year vacation. In addition, manufacturers of its downstream home textiles need help securing international orders. Manufacturers anticipate difficult times in the VSF market for around six months due to significant inflation in the export markets like Europe and the US.

Meanwhile, International players were more cautious and only made occasional purchases to meet emergency needs, consequently reducing the price. Downstream units were still digesting previously manufactured VSF in the domestic market. As a result, there were few orders since most market participants in the viscose market decided to adopt a wait-and-see attitude.

ChemAnalyst's forecast states, "The VSF market is expected to remain soft to low on the back of sufficient inventories and weak demand in the region. According to reliable sources, the downstream industries may start rerunning the VSF units around the tenth day of the first lunar month. The pre-stocked viscose stockpiles were recently enough to meet the domestic and foreign demand."