Viscose staple fiber: The growth in the third quarter is “eye-catching”; the fourth quarter may end in a low-key manner

As can be seen from Figure 1, the overall market price of sticky shorts showed an upward trend in the third quarter of 2016. During the period, the cumulative price rose by 3,400 yuan/ton, an increase of 25.3%.
Comparison table of monthly changes in sticky short market prices

As can be seen from Table 1, during the third quarter, the market price of sticky short-term products increased most violently in July, with a cumulative increase of 17% during the month. The growth rate from August to September was relatively average, with the growth rate being around 3%. In early July, cotton rose, the RMB depreciated, and the cost of foreign exchange payment for imported dissolving pulp increased, all of which drove the rise in short-term cotton yarn. The price of rayon yarn also rose simultaneously, becoming the trigger for the rising market throughout the third quarter. Throughout the third quarter, sticky short-term manufacturers have always had accumulated orders, and supplies are tight and prices are firm, pushing market prices steadily higher.

As can be seen from Figure 2, the price of sticky short-term raw materials and downstream market prices also showed an upward trend in the third quarter, and the increase was also outstanding, which contrasted with the rising trend of sticky short-term products. During this period, the market price of domestic dissolving pulp increased by 1,525 yuan/ton, an increase of 22%. The market price of rayon yarn increased by 2,950 yuan/ton, an increase of 17%.

As can be seen from Figure 3, during the third quarter, the operating rate of the sticky short-term industry was between 81% and 93%. The overall supply of goods in the market is relatively abundant, but manufacturers effectively grasp the market situation, push up prices, encourage downstream replenishment, and accumulate orders. During this period, manufacturers generally find it difficult to maintain inventory.
During the third quarter, manufacturers in South China, North China and East China have installed equipment for maintenance. Affected by the G20 Summit, Xiaoshan Fulida’s overall equipment was shut down as scheduled on August 20 and gradually resumed production around the end of September.

The market price of sticky shorts is rising steadily, and the cost increase is not as good as the market price of sticky shorts. Calculated based on the market price and cost price of sticky shorts on that day, the actual trading profits of sticky short manufacturers in the third quarter are considerable. The low point of profit margin during the period was 1% and the high point was 14%.
Comparison table of year-on-year data of viscose staple fiber import volume and average import price from July to August 2016

As can be seen from Table 2, from July to August 2016, my country’s cumulative import volume of sticky shorts decreased by 1% year-on-year, and the average import price increased by 9% year-on-year, with limited average fluctuations.
Comparison table of year-on-year data on viscose staple fiber export volume and average export price from July to August 2016

As can be seen from Table 3, from July to August 2016, my country’s monthly and cumulative export volume of sticky products increased significantly year-on-year, with the single-month export volume in August increasing by 102% year-on-year. Exports are good, boosting the overall production and sales of domestic sticky shorts manufacturers.

Year-on-year data summary table of my country’s export volume of sticky shorts from July to August 2016 (by country of production and sales)

From July to August 2016, according to the statistics of producing and selling countries, my country’s export volume of sticky shorts still topped the list, accounting for 87% of the total. In terms of year-on-year export volume, Turkey’s export volume increased by 159% year-on-year and Pakistan’s increased by 118%.
► Summary of the short-term market characteristics in the third quarter:
1. Seizing the favorable market conditions, manufacturers work together to actively promote the market.
2. Some manufacturers have installed equipment for maintenance, and the supply of goods in the market has been reduced, boosting the market.
3. Effectively grasp the timing of downstream replenishment, win accumulated orders, and support future production, sales and market conditions.
4. Drive the upstream and downstream to follow the rise simultaneously, supporting the sticky short itself.
5. Export is good.
► Fourth quarter outlook:
1. Since the beginning of the year, sticky short-term manufacturers have steadily turned losses into profits in terms of actual trading profits, and it is expected that the overall profits during the year will be considerable. Unless there are special reasons in the fourth quarter, manufacturers will tend to keep the equipment operating normally. And the weather is getting colder, which is not suitable for manufacturers to stop production and maintenance of equipment. It is expected that the supply of goods in the short-term market will be relatively abundant in the fourth quarter.
2. Most rayon yarn industry players have insufficient confidence in the market demand in October and have weak expectations for November and December. At that time, we will search for short-term or multi-directional stocks as needed.
3. Glued short manufacturers may flexibly grasp the replenishment needs and time points of yarn companies to win orders and support solid production and sales.
4. Calculated based on the current short-term market price and cost price,The company’s firm trading profit margin is 12%. Even if there are inevitable negotiations to negotiate profits later, firm trading profits may still be guaranteed during the year.
5. It is recommended to pay attention to the future cotton price, dissolving pulp and other related products, raw material price trends, as well as environmental protection and other aspects, and their impact on the sticky short market.
6. At the end of the year, the funds of sticky short manufacturers may be tight. At that time, you can pay attention to the actual operation of sticky short manufacturers.