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Insight | Time:Dec 5 2017 3:03PM
Polyester yarn performs better than cotton yarn and rayon yarn
 
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Cotton yarn market presented weak appearance in recent two months with falling trading price, and rayon yarn market showed similar situation, while market atmosphere of polyester yarn was better than that of cotton yarn and rayon yarn. The following part will focus on the analysis of operation status of cotton yarn, rayon yarn and polyester yarn.


Price of VSF kept decreasing since late-Oct, that of cotton was weak, and that of PSF kept rising, with increment at around 1700yuan/mt or 22.8% from mid-May to Nov 21, while price of PSF started falling from late-Nov. Dragged down by feedstock price, price of cotton yarn, rayon yarn and polyester yarn also slipped.


Stocks of cotton yarn, rayon yarn and polyester yarn were accumulating on the whole, but inventory of polyester yarn was not high.

Stocks of cotton yarn and rayon yarn were still increasing since Nov, mainly above 20 days, while those of polyester yarn were in downward correction from mid-May, mainly below one week and slanting low since 2005.

As for profit, polyester yarn plants saw the best margins, followed by rayon yarn plants, and most cotton yarn plants witnessed poor margins. But calculated by reserved cotton price, carded cotton yarn 32S was still profitable.


Profit of rayon yarn and polyester yarn narrowed recently, but most were still profitable. Theoretical profit of rayon yarn 30S and polyester yarn 32S was around 180yuan/mt and 290yuan/mt respectively, while although profit of cotton yarn 32S improved, most plants were under meager deficit. Therefore, operation status of polyester yarn market was better than that of cotton yarn and rayon yarn in view of price, inventory and margins.

In summary, price of cotton, PSF and VSF was falling, and decrement of VSF was bigger; inventory of cotton yarn and rayon yarn was mainly around 20 days, while that of polyester yarn was not high. As for margins, profit of polyester yarn plants was higher than that of rayon yarn, and that of cotton yarn was meager. Currently, the substitute effect among cotton, PSF and VSF is not apparent, but may become apparent next year, which is supposed to be mainly reflected in the replacement between cotton and VSF. More than 1 million tons of VSF capacity is expected to increase in 2018, and production is anticipated to hike, while demand growth is supposed to be slower than production growth, which may pose pressure on VSF market. Thus, the competition between cotton and VSF is likely to emerge again.
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