For the Quarter Ending March 2023
During the start of Q1 2023, both the price of feedstock wood pulp and the market for Viscose Staple Fibre (VSF) increased as a result of healthy purchasing activity from downstream industries. However, with the start of the gloomy season, prices seemed to be decreasing in the second half of the quarter, consequently, despite the fact that producers allegedly had large inventories of material and were likely to reduce their margins in order to initiate sales. The demand for viscose material from the downstream apparel and home textiles sector was still low, and there was no improvement even after some relaxation in the prices. As a result, the US market for VSF 1.2D was witnessed fluctuating throughout the Q1 of 2023.
After the Spring Festival holiday, the Viscose Staple Fibre (VSF) market began to surge, and prices were already higher than they were before the holiday. However, the slow operating rate and limited stockpiles led to a hike in Viscose Staple Fibre prices during the quarter. Also, in the second half, After the Chinese New Year, the downstream industries did not experience significant inventory pressure because the clothing industry, which has a modest volume of trade, slowed or stopped production beforehand and saw balanced demand and inventory levels. In the meantime, consumers held off on placing new orders because of poor confidence, while manufacturers were in desired to empty the stocked inventories. As a result, VSF 1.2D prices remained healthy throughout the first quarter of 2023.
The German market for Viscose Staple Fibre (VSF) witnessed an uptrend in its pricing, as demand from downstream textile industries was healthy during the first half of the quarter. However, the beginning of the dreary season appeared to have lowered demand. As a result, the demand for Viscose material from the downstream apparel and home textiles sector was inflexible, and there were no signs of change in the near future, despite the fact that producers allegedly had large inventories of material and were likely to reduce their margins in order to start sales. Thus, with the easing inflation rate, the German market for VSF 1.2D seemed uninteresting at the end of the quarter. The improvement in supply-demand imbalances contributed to the decline in manufacturing costs. As a result, the market for VSF showed fluctuation in its pricing
For the Quarter Ending December 2022
The price of Viscose Staple Fibre decreased throughout Q4 because of the unfavorable market conditions and low commodity contract values throughout the quarter in 2022. The price of VSF 1.2D CFR Texas hovered at USD 2260/MT, dropping 2% monthly. Just two of the several factors that led to the decline were the excess product supply and the weak demand in both the domestic and international markets. Moreover, pessimistic regional VSF buying sentiments contributed to the region's downward price trend. Additionally, the price of feedstock Wood Pulp decreased due to a significant domestic upstream supply, which directly influenced the downward trend in Viscose Staple Fiber Prices.
The price of Viscose Staple Fiber 1.2D declined, and the price was 2015/MT FOB Shanghai during December 2022. However, the trading of new orders was normal with the dull enthusiasm of downstream industries. The operating rate of the Viscose Staple Fiber industry was maintained at about 60%, and the overall low operating rate may continue under the loss operation of manufacturers. According to the market sources, the reduced operating rate was mainly on the verge of low demand from downstream apparel, home textiles, dress materials, knitwear, and non-woven sectors. Meanwhile, due to the rigorous Zero-Covid Policy, small businesses have found it difficult to meet their production goals to guarantee supplies. The Shanghai Shipping Exchange (SSE) also unveiled those exports from Shanghai went down 7.2% in October.
Due to adverse market mood and low commodity contract values in Q4 of 2022, the price of Viscose Staple Fibre fell throughout the quarter in Europe. The price of VSF 1.2D FOB Hamburg was estimated to be USD 2350/MT, with a monthly decline of 1.7% during November. The level of just-in-demand procurement was still maintained downstream, and inventories increased by a small amount. The terminal request did not improve, and the downstream orders for rayon yarn did not go as planned. Meantime, the domestic market's willingness to accept goods was not very high, and the demand side's performance remained sluggish.
For the Quarter Ending September 2022
Prices for Viscose Staple Fiber decreased in the third quarter of 2022. The factors that ruled the market were the excess supply of products and the weak demand from domestic and international markets. The falling price trend in the region was also influenced by the hostile regional buying atmosphere. Additionally, the price of feedstock Wood Pulp decreased due to a significant domestic upstream supply, which directly influenced the downward trend to continue. Furthermore, a sluggish market, higher interest rates, weaker growth, and a deteriorating labor market aided the lowering of VSF prices. On the US Gulf Coast, port congestion and logistical challenges had worsened the supply dynamics, weakening the market sentiment.
The third quarter of 2022 witnessed a price decline of Viscose Staple Fiber. The primary cause of this price change was the shifting cost pressure due to decreasing feedstock wood pulp prices. In the meantime, VSF demand struggled as some fabric mills started to reduce production due to reduced sales with fewer inquiries from the downstream apparel, home textiles, dress materials, knitwear, and non-woven enterprises sector. The stringent zero Covid policies, including the lockdowns of major cities, had crippled demand for imports in China. In August, VSF's operating rate decreased to 55%, and the average run rate for the downstream sector was also around 40%. Most plants had decreased their operating rate during the second half of Q3 due to the high temperature and power rationing difficulties.
Due to weaker feedstock and slower customer demand, Viscose Staple Fiber prices ceased their upward trend in the third quarter of 2022. Lowering River Rhine Level, disrupted shipping, and Economic slowdown has led to weaker market sentiments. Congestion at the German ports of Bremerhaven and Hamburg, which had developed over the previous few months of this quarter, had hampered the product supply internationally. At the same time, ample product availability and sluggish demand in the domestic markets contributed to the ongoing downtrend. Additionally, the third quarter saw a decrease in prices in the domestic market due to high inflation, which kept demand below seasonal expectations, leading to overflowing inventories in the region.
For the Quarter Ending June 2022
Viscose Staple Fibre prices rose in the first half of Q2, which reduced in the second half. The changing feedstock market could justify these price changes. Feedstock wood pulp supply remained tight in the regional market, owing to the disrupted supply amid China's lockdown. The US mainly imports from China and Germany. Therefore, as fuel and freight prices rise, so do apparel, home textiles, dress materials, knitwear, and non-woven products. In addition, the labor shortage disrupted the product's supply, constituting the increment in VSF value by 1.2% in the H1 of the second quarter. Thus, considering the aforementioned reasons, the price for VSF 1.2D flourished and was assessed around USD 2261/MT CFR Texas in the month of May.
In China, VSF prices rose in the first half of the second quarter, aided by the consistent volatile feedstock market. Rising import inflation, increasing demand in the international market, and soaring logistics cost further supported the increasing price trend. It could be observed that the price of raw material wood pulp is higher, supported by the substantial energy increase. Downstream demand from apparel, home textiles, dress materials, knitwear, and non-woven fabric increased earlier, subsiding in the second half. Consequently, the price for VSF 1.2D settled at USD 2305 FOB Shanghai respectively. In Contrast, the Indian market also rose in the first half of Q2, which was reduced in the second half by 4%. In addition, a particular scheme such as Scheme for Integrated Textile Parks (SITP), as well as revisions on the freight charges on textiles by the Indian government, had boosted the textile industry, driving the market for viscose staple fiber in India. Grasim Industries Limited had also increased VSF prices by around 6 % as of the previous rates. To conclude, the market was volatile in the Indian and Chinese markets, and the price for Indian VSF 1.2D settled at USD 2395/MT Ex-Mumbai in June 2022.
In Europe, the price for Viscose Staple Fibre increased by 2% and then dipped due to increased feedstock wood pulp prices. But, as the demand seemed sluggish from downstream apparel and home furnishing sector, VSF price dropped. In the Q4FY22, Grasim Industries' revenue from wood pulp and viscose staple fiber was up 45.79%. The global demand for textile products, especially in Europe, also led to a positive demand environment for viscose staple fiber (VSF). The supply chain disruptions also drove the rise in the VSF prices because of COVID-19 restrictions and the ongoing conflict between Russia and Ukraine. Therefore, the domestic VSF prices increased in line with soaring feedstock prices and improved demand in the first half. Conclusively, the price for VSF during May settled at USD 2362/MT FOB Hamburg.
In North America, prices of Viscose Staple Fibre (VSF) increased in the first half of Q1 due to high demand from downstream industries. This uptrend was observed amidst prolong supply tightness as the industry faced operational cuts ahead of the Chinese New Year. The market later stabilized due to improved product availability in the regional market. Since the US relies heavily on China for the product, high freight charges and port congestion at Chinese ports disrupted the US market, while demand from woven and non-woven segments remained stable. As a result, the price of Viscose Staple Fibre 1.2D stabilized in the second half of the first quarter and settled at USD 2291/tonne CFR Texas in March 2022.
Viscose Staple Fibre (VSF) prices in India have been steadily rising since the first quarter due to a scarcity of raw materials, which is primarily imported from China. Due to the Chinese spring holiday, prices remained firm with high demand, resulting in a price increase. Grasim Industries, a key player in the Indian market, has planned to increase production to 801 KTPA through brownfield and debottlenecking initiatives, which would likely increase supply. In China, after observing a hike in prices in the first half, the price for VSF in the domestic market stabilized on the verge of submerged demand from downstream textile industries. Thus, in China prices for VSF 1.2D settled at USD 2297 FOB Shanghai in March.
In Europe, VSF market remained dull throughout the quarter due to supply disruptions caused by the Russia-Ukraine conflict. The conflict between two countries hampered the demand-supply chain. Textile manufacturers reduced their operating rates in the face of rising energy costs. The Feedstock for VSF and wood pulp prices have also increased, causing manufacturers to minimize production, amidst weak buying sentiment in domestic and international markets. As a result of fewer VSF inquiries, prices for VSF 1.2D settled at USD 2343 FOB Hamburg in February 2022.