No need to worry about slower rayon yarn sales

Recently, most of the market participants remain optimistic, believing that the delivery of fibers and yarns is still tight and there is upward momentum. However, some pessimists think that sales of high-priced fibers and yarns has slowed down, and it is difficult for downstream buyers to follow up. With the approaching National Day holiday, the market may become sluggish.

First, let us take a look at the situation of VSF. The enthusiasm for restocking by downstream plants has decreased recently, but VSF producers are still experiencing tight delivery, and spot goods are at a rare low level of about one week, with pending orders still more than two weeks. Usually, downstream users do not wait until raw materials are exhausted before restocking, as signing contracts and delivery both take time. Furthermore, based on some feedback, there may be limited shutdowns or holiday schedules of yarn mills during the National Day holiday, which would drive downstream customers to replenish stocks at the end of Sep. At that time, the supply of fibers will still be tight. With the rise in prices of pulp and other raw materials, and increased costs, VSF plants are unlikely to actively offer discounts, and there will be a greater upward momentum instead.

As for yarns, many spinners are still fulfilling previous orders, and the high prices in the market have made it difficult for weaving mills to follow. According to feedback, there are no major issues with sales this month, but the main concern is the accumulation of inventory during the National Day holiday. Assuming that yarn mills almost do not take holidays during the National Day, while weaving mills have holidays of around 7 days, the current inventory difference can provide some buffer. If fiber prices remain strong at that time, it seems that yarn mills do not need to rush into promotions.

The arrival of the fourth quarter will definitely exert an impact on demand and expectations. It is only a matter of time for the market to become sluggish, with the next turning point being the period before the Spring Festival. However, the turning point still has some flexibility, and at the moment there is no need to panic prematurely, but it is important to keep an eye on market changes.