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Insight | Time: May 21 2020 5:20PM
Does rayon yarn market warm up?
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More price enquiries were heard recently, and some products enjoyed better sales. From conventional yarn and fabric to colored yarns and high-count yarns all were sold at low level intensively. Compared with the bearish sentiment in Mar-Apr when trades were thin despite low prices, high inventory has finally begun to decline which kindled the light of hope for the industry. Lockdown in many countries eased in May, and major ports also showed signs of restarting. In addition to delivery of pre-cargos, some traders and dyeing mills began to purchase and produce stocks respectively. It can be seen that what can affect and reflect the market is always the change in end-users demand.

In addition to sales of finished products, the most representative and time-sensitive data in the industry chain is China Textile City. For whether the market may really pick up, reference can be made to the changes in turnover of related fabrics. Turnover of chemical fiber fabrics and cotton fabrics this year is about 67% and 50% of the same period last year, it corresponds to that polyester fabrics performed slightly better than cotton/rayon one.

Cotton grey fabric performed better than rayon grey one. Since work resumption of cotton fabric mills in 2020, especially in Mar, the average turnover was about 70% of the same period last year, while rayon grey one only reached around 33%. It embodies that China local cotton orders are better supported, and also reflects why the various data and trends of rayon grey fabric are the weakest in the performance of 100% cotton fabric, polyester/cotton fabric, and polyester/rayon fabric.

Stimulated by the news of the work resumption outside China, starting from the first domestic trader or downstream mill to stock up (especially the current price is low enough), the market sentiment has improved, which boosted production confidence in yarn and fabric links. Work resumption after May Day holidays was better than anticipation. Overall turnover moved up slightly, but it should also be noted that the actual end-users order recovery is still uncertain. At present, it is only an increase in enquiries and replenishment amid speculation mood. Whether it can continue is still unknown, and there is still a preliminary inventory to be accumulated. Unthinking optimism and radical operation are not suggested.

In 2020, the situation is special and unprecedented. In addition to the operation of the mills themselves, changes of upstream and downstream, other products and the macro environment are noteworthy.
[RISK DISCLAIMER] All opinions, news, analysis, prices or other information contained on this report is provided by analyst of Zhejiang Huarui Information Consulting Co., Ltd (CCFGroup) as general market commentary and does not constitute investment advice. CCFGroup will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
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