How to survive from steep price decline by rayon yarn mills?

Rayon yarns of various varieties have seen unsmooth sales since Nov and spinners actively have sales promotions under capital and inventory burden. The price of vortex-spun, open-end, siro-spun and compact siro-spun yarn has declined by 1,000-1,500yuan/mt, with theoretical loss expanding to more than 1,000yuan/mt. However, ring-spun yarn has just lost ground by about 500yuan/mt. At the same time, the minor loss also performs better than polyester and cotton yarn. Why is there such a difference in rayon yarns?

1. Supply. Although ring-spun yarn still accounts for about 40% of pure rayon yarn capacity, the distribution of enterprises is relatively scattered, and as the most traditional process, most spinners have regular customers who have been maintained for many years, and the cooperation is relatively steady. Open-end, vortex-spun and compact siro-spun yarn mills have the characteristics of high concentration of regional and leading enterprises. The advantages of scale have brought about the competitiveness of cost and volume. However, when the market weakens, it is also easy to face the pressure of underselling products when the stocks are cumulated rapidly. In terms of price fluctuation, ring-spun yarn has always been more moderate than other varieties.

2. Demand. Although downstream buyers are more sensitive to the price of raw materials in procurement, there are many examples of grabbing market share due to low price advantages (such as the impact of vortex-spun yarn on ring-spun, compact siro-spun and siro-spun, especially high-count yarn), but the requirements of various fabrics for yarn and the differences in yarn technology still allow each variety to retain a certain position, such as grosgrain for open-end yarn, circular knitting machine for ring-spun yarn, etc. Coupled with the downstream convention in terms of equipment, order requirements, and partnership, the short-term price difference is not enough to make them have changes immediately.

In addition, compared with open-end and vortex-spun yarn of the exaggerated price decline, the export dependence of ring-spun yarn is not so high. It is roughly estimated that vortex-spun yarn accounts for 70% or even higher in China's rayon single yarn exports, while open-end yarn just accounts for about 10%. At the same time, vortex-spun yarn exports digest nearly 1/4 of the output, which is 5-10% for open-end yarn and less than 5% for ring-spun yarn. Although the export percentage of rayon yarn is less than 10% of the total output, the short-term increasing volume will also exert some impact on the market.

Compared with the rising stars benefiting from high-end or big volume, the cost difference among ring-spun yarn mills is not so large. In addition, similar production control measures have been adopted by downstream customers, and the pressure of inventory and loss is more dispersed, thus the performance of ring-spun yarn is more stable. However, it is obvious to see the high price difference with other products. Recently, the inventory of ring-spun yarn has accumulated, and the price has gradually dropped from 17,000yuan/mt. If such rare weakness continues, the spinners may be hard to survive.