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Insight | Time: Sep 11 2019 5:30PM
Tough rayon yarn market
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In recent years, climate has been more and more capricious, and it seems to have an impact on textile and apparel industry. The summer came to an end coupled with summer vacation. Autumn orders just improved slightly, which had limited effect on market sentiment and trend.

1. Demand narrows and price drops

At present, vortex-spun rayon yarn enjoyed tolerable sales but unlike strong pull to overall market in same period of previous years, while other varieties were still weakening. It seems that one of problems are under discussion from Mar, that is, why is order or demand not as good as that in past years?

Trade environment, exchange rate and other factors were unavoidable. In addition, cost advantages such as labor and production shift to Southeast Asian weakened further, not only reflected in orders decrease of fabric, but also double export of rayon yarn.

However, even if there is a shift in textile and apparel market, orders and domestic demand still saw support. The shift was unfavorable to rayon yarn. End-users orders were small and sporadic as fabric mills and brand merchants deliberately compressed replenishment and there was also a change in fashion trend, which made it difficult for yarn mills to produce as much as that in previous years and then to sell stocks intensively. Although sales ratio may not drop to 50%, inventory accumulation gradually depleted not only capital but also market confidence.

In fact, there were some products that performed well. Polyester/rayon yarn was slightly better than cotton/rayon one. In addition to fluctuations of crude oil, it was in accordance with the market. For example, after several years of fast fashion, the trend of fashion began to turn to "slow fashion" and "fewer but better". Polyester fabric in cotton spinning replaced traditional wool spinning, and strengthening environmental protection required apparel to be more durable and wearable. In addition, brand merchants controlled costs. In general, recycled and polyester fiber attracted more attention as VSF was inferior to recycled and polyester in production process and wear durability, and Modal and Lysell witnessed higher price but limited stocks.

For yarn mills, in addition to order requirements, polyester yarn was more economical and more capable. Therefore, there was production shift in Fujian, Shandong and Jiangxi, which in turn will support raw fiber sales especially polyester not viscose. From pulp and fiber to yarn and fabric, overall viscose market is too difficult to improve. But anyway, there is no market that will fall forever.
[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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