Viscose Filament and Staple Fiber Prices (Bi-Weekly Report) - Emerging Textiles

Viscose Staple Fiber Prices and Viscose Filament Prices in China

Viscose Filament and Staple Fiber Prices Bi-Weekly Report

7 May 2008

Viscose staple fiber prices are further falling in China although not yet back to their level in 2006. After resisting in the last months, filament prices sharply decreased in the past fortnight. Cotton pulp and cotton linter prices are heavily declining. Leading global producer Grasim reported weaker volume sales in the first quarter this year.

Viscose prices continued dramatically falling in the last two weeks in China, reflecting a low level in demand amid too large inventories.

Average price for 1.5D lost 800 yuan per metric ton (-4.23%), decreasing by 13.81% in two months.

No Substitution In Sight

VSF prices are only down 5.73% from their level a year ago, however, and much higher than two years ago (see our historical graph below).

Prices rose 43% from the start of 2006 while cotton prices were down 3% and polyester prices only up 4%.

The price gap was significantly reduced in the past months between viscose fibers on one side and cotton and polyester fibers on the other side.

There is still room for lower prices before substitution will favor viscose staple fibers, however.

Falling Filaments

After relatively resisting in the past months, viscose filament prices started also collapsing in China, under large inventories and low demand.

Averaged price for 133.3 dtex fell 1,000 yuan per metric ton or 3% in a single fortnight.

Raw material costs of viscose producers are following the same trend.

Cotton linter prices were down 400-500 yuan in about two weeks while cotton pulp prices were losing 500 yuan at 1,000 yuan per metric ton, on average.

Given the current situation of the textile industry in China, prices may further decline in the near term.

India's Grasim Reports Weaker Market

The sole viscose producer in India and a leading competitor, Grasim reported mixed results for its fourth quarter fiscal (Jan-Mar 2008).

Revenues from viscose fiber sales increased 10% in rupee terms from their level in the same quarter of 2007, mainly thanks to higher unit prices at 107 rupees per kilo (+21%).

Sales volumes however fell 10% at 61,650 metric tons.

Grasim is currently engaged in a significant expansion of its capacities which already rose 24% in the last quarter at 333,975 metric tons.

Capacities should be further raised to 453,000 tons in the near future thanks to an expansion in Karnataka (31,000 tons) and a greenfield investment in Gujarat (88,000 tons).

Thanks to the surge in demand for viscose fibers in 2007, revenues were up 30% in 2007-08 (April-March), reflecting a 8% increase in volume sales and a 21% jump in average unit prices.

The global viscose market will not improve before inventories are eliminated, Grasim however warned.

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