Quarterly Update on Global Viscose Staple Fiber (VSF) Market
For the Quarter Ending June 2021
After the restoration of the industrial infrastructure in the US Gulf coast the operations at the US textile industry accelerated with the improvement of the supply chains during the second quarter of 2021. However, the pricing movement of Viscose Staple Fiber remained on uptrend as the feedstock wood pulp prices observed a hike of 40% since January 2021 and imports from the overseas remained firm with an additional support of the high freight charges. Whereas the mass vaccination programmes amplified the public movement which provided the much-needed support for the economic activities. As a result, VSF demand outlook improved in the second quarter of 2021.
In China, the Viscose Staple Fiber (VSF) market was weak throughout the second quarter of 2021, as the high-priced raw materials amidst the rising inflation rate in China, strengthened the wait and see approach amongst the spinners. Finnish Group Stora Enso suddenly announced shutdown of its wood pulp activities and pulled out from the Chinese Viscose market which ended its sales to the regional producers in Xinjiang province. The prices of VSF in the Chinese domestic market were pressured throughout the quarter with Ex-Works prices for 1.2 D and 1.5 D grades settling around USD 2515 per tonne and USD 2485 per tonne respectively in June. Whereas in India, the market dynamics were stagnant in the first half of the quarter due to the restricted activities as the second wave of COVID impacted the market activities but later the demand flourished from the textile industry.
During the second quarter of 2021, the VSF market in the European region observed a significant improvement, due to the mass vaccination drives which supported the public movement during the second half of the quarter. As a ripple effect, the market activities gained pace and the offtakes from the textile industries surged during the second quarter of 2021. The production levels remained affected at several manufacturing facilities due to surge in cost of feedstock wood pulp against the rising demand. The stated factors resulted in a significant hike in the VSF prices offered by the producers.
For the Quarter Ending March 2021
The North American VSF market got severely hampered during the first quarter of 2021, as the supplies were tight throughout the quarter due to low inventories level of the key feedstock. The industrial infrastructure in the USA Gulf region was hit as several producing facilities were forced to shut down the production amid the arctic winter storm. Demand from the downstream rayon market surged due to the better offtakes from the downstream sector. The supply-demand gap widened which led to the uptrend in the pries of VSF in the North American region.
During the first quarter of 2021, the supplies of VSF in the Asia Pacific market were curtailed due to the strict environmental protection inspection in China which led to reduced supply of the cotton linters ahead of the spring festival. APAC VSF market started to rebound since the mid of Q4 and the domestic price hiked amid the shortage of the key feedstock. In the meanwhile, Indian traders appealed the government to remove antidumping duties (ADD) over VSF imports in the H1 of the quarter. Demand surged from the downstream industries due to the stable consumption from the textile industry. Raw material pulp is currently remained on uptrend amid continued tightness in the supply as the industry is slowly recovering from the operational cuts impended since the mid of March. Viscose staple fibre 1.5 D-EXW Jiangyin prices were assessed at USD 2500 per MT in the final week of March.
The European VSF market witnessed tight supplies in Q1 of 2021, due to the lack of feedstock amid reduced imports and transportation lag in northwest European region due to bad weather conditions. Further forth-coming ban on the single use plastic surged the demand of the VSF in European regional market whereas trade with the APAC region improved as the VSF demand reached the pre-COVID levels in some countries. As a repercussion of the hiked prices of feedstock, the price of VSF surged in the European Market.
For the Quarter Ending December 2020
Following a sturdy rebound in the textile sector due to the pickup in demand due to the festive season in Q4, offtakes of various textile materials like Viscose Staple Fiber (VSF) witnessed a significant climb in the regional market. India’s National Committee of Textile and Clothing have been urging the government to remove anti-dumping duty on VSF as the high prices of these fibers from domestic manufacturers is interfering with the profit intakes of downstream workers like garners and weavers. The move is likely to impact the commodity pricing in India in the near term. In addition, anti-China movement in the U.S. has triggered a sudden shift in the outsourcing of textiles which were previously being imported from China to India.
Supply of Viscose Staple Fiber (VSF) from overseas picked up with respect to the previous quarters owing to a rebound observed in the retail sale of textiles after the ease on stringent COVID-related restrictions. Furthermore, increased demand for home textile products following the shift to work from home has caused a prominent increment in consumption for various textile products. Suppliers were heard catering imports from more than two Asian countries to avoid from the risk related to any product shortage amidst the pandemic uncertainties. By the December end, sentiments were raised after the US government along with several private officials signed a MoU to assist Asia Pacific garment workers severely hit by the dented supply chains due to Covid-led trade disruptions.
Recovery in the European Viscose Staple Fiber (VSF) market was severely hit by a sudden buzz created by the new trace of coronavirus found in UK. Partial lockdown implied in several parts of Europe, majorly UK has caused a force measure in various garments stores causing the slowdown in the sales of garments in the later half of the quarter. Furthermore, the Brexit agreement signed between European Union and UK has also concerned several suppliers over their export margins in the coming years. Traders anticipate that this deal, aiming to support UK as an independent trade identity could bottleneck the investment opportunities and supply chain in the near-term.