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Insight | Time: Aug 23 2019 3:00PM
Acrylic fiber market may extend recent decline on poor orders
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Market players showed a helpless sigh for the flagging yarn market this year. A boss of spinning plant in Jiangsu told the author that there were a few orders in July-August in previous years, but it was difficult to merely make units keep running this year. Units ran at a half of full capacity at present and to make raw materials into yarn. However, inventory was excessive, and units were likely to shut down amid this situation. Market participators analyzed that the cause for this condition was no orders from end-users. In former years, yarn plants tried best to maintain running at a high level for no more labors, while they had to reduce run rate due to the difficulty of curtailing inventory currently. There were no bright products as the breach, so plants had no other solution except cutting operating rate due to the sales difficulty of regular yarn as well as no direction of production.

Besides macro problems, there were also problems within the industry. First of all, prices of acrylic staple fiber were at a disadvantage compared with other products, so even though the space for acrylic fiber to move down was expected to widen due to the expectation of declining ACN, considering that the domestic sales market may start, acrylic fiber plants were estimated to still be intended to slightly decrease.

Secondly, due to increased sales pressure, yarn plants also tended to sell at reduced priced to reduce inventory. Compared with raw materials, the price adjustment of finished products 828 was larger, and prices headed for the lowest level since the beginning of the year at present, which reflected the bleak degree of the current market to some extent. Conservatives produced on orders, but the enthusiasm for production of partial market players took a hit due to compressed profits caused by dropping prices.

Therefore, the current problems mainly comes from orders of end-users, and the active adjustment can improve this situation. On the one hand, new yarn and acrylic fiber with unique characteristics need to be developed and gather popularity in the market. On the other hand, it is necessary to cut cost pressure. Under the expectation of rising ACN capacity, the downward pressure on acrylic fiber may decrease naturally, while the development of energy saving and emission reduction also needs to be followed up. It can be believed that the market can be as written in the poem: If winter comes, can spring be far behind?
[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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