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VFY Prices Fluctuate in 2023, Potential Surge Expected Amid Textile Challenges in 2024
VFY Prices Fluctuate in 2023, Potential Surge Expected Amid Textile Challenges in 2024

VFY Prices Fluctuate in 2023, Potential Surge Expected Amid Textile Challenges in 2024

  • 03-Jan-2024 4:51 PM
  • Journalist: Yage Kwon

In 2023, the market for Viscose Filament Yarn (VFY) exhibited a relatively stable to declining price trend, marked by sporadic sales promotions early in the year. After that, sales remained steady without any pressure, and trading prices increased gradually. Meanwhile, by the end of the year 2023, the price reduction was encouraged by the lower number of purchases. As a result, manufacturers reduced the quotation for VFY Bright 40F to USD 4924.99/MT Ex-Surat by the end of December.

In 2023, VFY plants were operating at a consistent 90% operating rate, the highest level in the previous few years. The primary reason for this was increased production activity coupled with stable VFY sales and profits. No unforeseen circumstances or maintenance influences were present at the same time. In the third quarter, during the sluggish season, VFY sales decreased. The feedstock stockpile was restrained by downstream plants and traders, and the VFY plant inventory built up to about two months. Later, when export orders improved and VFY items sold better in Asia, the sales ratio increased, and the inventory continued to drop. By the end of December, the VFY industry's inventory had nearly stabilized, with most producers offering discounts to move their stock.

Looking at the overseas market, China's VFY exports for the first eleven months of 2023 decreased by 12.45% in comparison to the last year. Despite this decline, the concentration of major VFY export destinations improved, with India accounting for 58% of China's VFY exports. This suggests that overall export demand for VFY increased in 2023, laying a favorable foundation for the year ahead.

However, recent developments in the Indian textile industry present challenges for VFY producers. Rising imports of Man-Made Fiber (MMF) fabric and higher domestic fiber prices are adversely affecting local spinners, knitters, weavers, and processors, making it difficult for them to compete on pricing. The Federation of Gujarat Weavers Association reports that China is dumping fabric into the market, causing unsold inventory due to weaving units operating at full capacity. As a response, there are plans to reduce output by 20%.

In light of these challenges, ChemAnalyst anticipates an increase in VFY prices in the coming months. The expected surge is primarily attributed to a rise in overall demand, coupled with limited inventory levels due to slower production activity. Additionally, the impact of high-priced imported VFY from China is likely to influence VFY prices in the Indian market, adding another layer of complexity to the industry's dynamics in 2024.

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