VFY industry may still face challenges in the new year

VFY price of China generally trended downward this year and it was not until the fourth quarter when the market recovered somehow. The market failed to return to normalcy in the first quarter because of the COVID-19 outbreak. Although the price stabilized during the period, the market was almost closed. During the second and third quarters, end-user demand declined sharply compared with past years, while inventory and operating rates generally stayed at high level. Although VFY companies were actively controlling production, the price still dropped amid huge sales and capital pressure. With improving demand and better market expectation in the fourth quarter, VFY was quoted up when prices of other textile raw materials generally climbed up.

Although the impact from the epidemic was still ongoing, the operation of Chinese market has almost returned to normalcy and the emergence of vaccines would bolster world economic recovery. The production could hold steady next year, except for temporary maintenance by some VFY plants. The consumption of VFY is likely to recover to the level of 2019 and the contradiction between supply and demand may be alleviated, but how to absorb the existing stockpiles is still a big issue, which will exert negative impact on market trend, capital and attitude of VFY suppliers. Moreover, the profit is meager, so VFY industry may be still challenging.