VSF Market is Likely to Improve After Spring Festival in China

China: The Viscose Staple Fiber (VSF) industry is gradually starting to work again after the Spring Festival. Most rayon yarn and fabric mills gradually began production after the sixth day of the Lunar New Year, while VSF plants have essentially resumed operations. Meantime, demand has gained momentum from its derivative market, causing an increment in VSF prices by 4.7% during the last week of January 2023. As per the ChemAnalayst database, the price for VSF 1.2D was around USD 2205/MT FOB Shanghai.

Before the vacation, there was a wave of massive transactions in VSF plants and amongst the downstream sectors, resulting in a considerable inventory decrease. Since the units continued to operate during the Spring Festival, the stockpile quickly increased at VSF plants.

Despite rising sales before the holiday, the scenario for rayon yarn mills was not as satisfactory as expected. However, the downstream industries were not under a lot of inventory pressure after the Chinese Lunar New Year since the clothing sector with low trade volume also reduced or ceased production or took a holiday beforehand, witnessing balanced demand and inventories level.

Following the Spring Festival, Suppliers of VSF are more inclined to enhance their offerings. Additionally, the epidemic's second widespread infection did not happen over the Spring Festival. As a result, China's consumers have high hopes for the country's economy. Despite the industry chain's modest trading sentiment, bullish expectations are evident from the orders from downstream industries post-Spring Festival.

In conclusion, although spinners and VSF plants do not have big inventories, the industrial chain still involves transferring inventory, which ultimately depends on consumption. The willingness to raise the price of products made of VSF is also relatively high, as China's economy is expected to revive. As a result, the chain of the viscose industry is also anticipated to grow.