Global VSF Prices Hold Steady in the Second Half of May Amidst Sluggish Downstream Demand
Global VSF Prices Hold Steady in the Second Half of May Amidst Sluggish Downstream Demand

Global VSF Prices Hold Steady in the Second Half of May Amidst Sluggish Downstream Demand

  • 04-Jun-2024 4:13 PM
  • Journalist: Jacob Kutchner

In Germany, Viscose Staple Fibre (VSF) prices have remained unchanged for the past four weeks, reflecting a prolonged period of stability driven by stagnant consumer spending and consistent demand from downstream industries. May 2024 brought an unexpected surge in national inflation, surpassing initial forecasts and complicating the economic landscape further. However, the chemical sector's reliable pricing strategies helped alleviate some pressure on VSF production. Meanwhile, escalating geopolitical tensions and logistical challenges have dampened demand from key importing nations, exacerbating the stagnant market conditions. Additionally, VSF raw material costs, such as wood pulp, stabilized following a slight increase in the previous month. Local inventory levels remained sufficient, although international orders decreased over the week. Domestic demand became the primary driver for downstream digestion. Additionally, reports indicate that Germany's VSF exports to the US increased in the first quarter. From January to March, Germany's total trade with the United States, encompassing both exports and imports, reached €63 billion (USD 68 billion). In contrast, trade with China slightly declined, amounting to just under €60 billion during the same period.

Similarly, the VSF market experienced stagnation, as prices remained rigid, a situation exacerbated by the influx of inexpensive imports from the Asian Pacific and European regions. This surge in competitively priced imports collided with subdued demand from downstream sectors, intensifying the market's immobility. Concurrently, recent reports revealed a troubling decrease in USA VSF imports from the global market, indicating a concerning slowdown in downstream activities. Compounding these challenges, consumer sentiment in the United States plummeted to a six-month low, reflecting widespread economic concerns fueled by persistent inflationary pressures. This significant decline in sentiment, the most notable since 2021, highlights the increasing strain on household finances and raises fears of further economic instability in the coming months.

Throughout the week, the prices of VSF stayed constant, mainly due to low demand from downstream sectors. The market trend for VSF remains stable, despite some manufacturers raising their prices. These VSF manufacturers are hesitant to sell at lower prices and have restricted new orders, showing a cautious approach to market conditions. However, there has been no notable improvement in the downstream rayon yarn market, causing buyers to adopt a wait-and-see approach. They are waiting for major manufacturers to announce new prices before making purchasing decisions.

In Conclusion, analysts anticipates that VSF prices are likely to rise in the US and Asia-Pacific regions due to high shipment freight costs, while the European market is expected to remain low because of subdued demand.

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