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Insight | Time: Mar 2 2020 3:00PM
Resumption rate not equal to operating rate: rayon yarn market still recovering
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As the epidemic was gradually controlled, more yarn mills resumed operation. In end-Feb, there were several major producing areas, such as Shandong, Jiangsu, Zhejiang, Fujian and Xinjiang, where the mills returning to work reached over 75%. But amid problem of employees returning to their jobs, O/R of most yarn mills was still less than 50%. This was mainly because there were travel restrictions in the hometown of the employees, and some workers who have returned needed to be isolated and observed. According to the feedback, the O/R is expected to rise to 70% or higher in early-Mar.

In addition to the yarn link, the downstream weaving and dyeing factories and China Textile city also opened at the end of Feb. In addition to the similar logistics and labor problems of yarn mills, the orders were thin, so the recovery time and rhythm were relatively slower. It can be said that although the production increased this month, mostly for the delivery of orders and some trades. In fact, end-users demand has not effectively recovered.

The real start-up of the market depends on the end-users market. Only when the fabric mills begin to receive orders and deliver goods, can there be upward demand for yarn and stabilize market confidence. Although there may be limited support from feedstock, it is also good for the market to improve sales in Mar-Apr if it can meet the end-users demand. In terms of rayon yarn, the current profits are relatively good.

[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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