After major manufacturers of viscose staple fiber significantly lowered their contract prices at the end of May, taking 1.5D staple fiber as an example, the spot market price has entered 12,500 yuan/ton, and the product has basically entered a loss-making state. Even viscose staple fiber is losing money. The fiber still cannot arouse the interest of downstream yarn mills. It is reported that after the major manufacturers lowered the price by thousands of yuan per ton, the factory destocking situation is still not good. This week, the two domestic viscose staple fiber giants have successively announced load reductions and overhauls. So in In the current environment, can load reduction and maintenance support the viscose staple fiber market?
There are two main points in the current market: 1. With viscose staple fiber already at a loss, will raw pulp pulp follow suit? 2. Will there be a miracle of demand improvement for rayon yarn during the traditional off-season? Let’s look at them one by one.
1. Will viscose staple fiber pulp lose money and follow the decline?
Since late May, viscose staple fiber has basically entered a state of loss. During the same period, we can see that because the price of viscose staple fiber fell, while the decline in pulp was relatively small (or almost no decline, the imported US dollar quotation only dropped by 20 US dollars/ton), the gross profit of viscose staple fiber fell rapidly, and Recently, as the viscose staple fiber market has weakened, factory loads have dropped. Although the market may think that pulp supply is tight, but looking at the trend of commodities, the market has a cycle, and if there is an increase, there must be a decrease, so pulp Meal is more likely to make up for the decline.
2. It is unlikely that demand will improve in the off-season from June to July
The author once mentioned that June-July is the off-season for the downstream, regardless of whether it is mild or severe The transaction volume of Textile City can still be judged from the transaction situation of downstream rayon cloth. The transaction volume in June and July will decrease compared with April and May. However, there is one difference between the overall transaction volume of rayon cloth and Textile City: rayon cloth. After the second half of the year, the basic transaction volume of cotton cloth gradually declined, while the overall transaction volume of China Textile City reached a second high around September. Judging from the past week, the weekly transaction volume of rayon cloth was only 2.3 million meters. That week became the lowest trading volume since late March. If the trading volume continues at a low level this week, it proves that the market has entered the off-season.
With the obvious decline of viscose staple fiber recently, rayon yarn has declined weakly, but the magnitude is small, which has improved the profitability of rayon yarn. However, I also mentioned above that the trading volume of rayon yarn has declined. Obviously, judging from the traditional off-season, it is unlikely that the demand for rayon yarn will improve, and there may still be room for downside in the market outlook.
3. The impact of load reduction and maintenance
In the current situation where there is almost no good news, let’s take a look at the issues we want to talk about. It means load reduction and maintenance. In the past week, the two major domestic viscose staple fiber giants have announced load reduction and maintenance news. In this case, the viscose staple fiber load has dropped to about 65%, and this load has also been reduced since 2015. Load lows other than June-September 2020.
So what impact will load reduction and maintenance have on the market? The author believes that the influence is mainly from two aspects. First, it affects the psychological expectations of market participants. 2. The impact of maintenance entering the substantive implementation stage. First, let’s look at the psychological expectations of market participants. Due to the unsatisfactory destocking situation after major manufacturers cut prices by 1,000 yuan per ton, and the traditional off-season, market participants themselves are skeptical about the maintenance news, and first of all doubt whether it can enter into substantive implementation. , and then doubt that even if it is implemented, how much positive impact will it actually bring to the market? From this point of view, the maintenance news has little positive psychological impact on market participants in the short term.
Next, let’s look at the impact of the overhaul entering the substantive implementation stage. Here it depends on whether the overhaul can be actually implemented. If it is actually implemented, we have always said that the fundamental factors that affect the market are raw materials and supply and demand. The raw materials will not be discussed here for the time being. Let’s talk about supply and demand. Since demand improvement may not be big, then substantial production reduction seems to be able to improve the supply and demand relationship. Improvement, and the extent of improvement depends on the situation at that time.
Finally, let’s summarize. When the current demand is expected to weaken and raw materials are likely to make up for the decline, the news of load reduction and maintenance is estimated to have little effect on boosting the market in the short term. In the medium term, if The load reduction and maintenance can be implemented well. After the market bottoms out in the short term, it is possible to gradually stabilize after the supply and demand relationship is rebalanced. </p
