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.
For the Quarter Ending March 2022
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.
Demand remained stable throughout the quarter from both woven and non-woven segments. USA depends largely on imports of VSF from European and Asian nations. In the past, USA has been key destination for China, Thailand, India and others while Germany and Austria are key exporters from Europe. However, strong freight charges and shipping costs in H1 of Q4 from Asia to US West Coast and East Coast meant material reaching US shores was costly. However, freight charges eased towards H2 and consequently prices of VSF also observed some significant decline. VSF prices were assessed at USD 2295 per MT in October and dropped substantially to USD 2123 per MT in December on CFR basis.
Improved demand from the domestic market amid production disruptions in China led VSF prices to take consistently uptrend across Indian market. Reopening of school colleges, and offices coupled with festive season has increased the consumption and pushed up the prices during past three months. Thus, VSF prices rose and settled around INR 154200 per MT 1.5D Ex-Depot Mumbai in December. In addition, Grasim Industries has commissioned a new VSF line of capacity 300 tons per day that increased their total production capacity from 591000 to 700500 TPA. In China, VSF market was termed as volatile in October as the prices of available material rose sharply. There was limited availability of material in the spot market as raw material prices climbed strongly while operating rates for VSF remained sluggish which kept an upward pressure on the available material. EXW Nanjing price rose to USD 2075 per MT in October and FOB prices surged to USD 2104 per MT. However, demand dropped significantly towards H2 of Q4 which stabilized the prices after October volatility.
Wood pulp prices retreated in Q4 after showing tremendous volatility in September 2021. The drop in prices was recorded for the first time since H2 of 2020. Hence, the cost pressure over Viscose Staple Fibre (VSF) eased marginally in the market, however there were limited impacts of price reduction in wood pulp over VSF as overall cost of production increased on the back of strong energy feedstock prices. Consequently, VSF prices rose consistently throughout Q4. Imports from Asia remained sluggish owing to resolutely high freight charges and shipping costs between Asian ports and European ports. In December, VSF prices were assessed at USD 2229 per MT.