Driven by low production costs and subdued consumption across major regions, Viscose Staple Fiber (VSF) prices remained stable in H2, FY2024. Prices in Europe, particularly Germany stabilised at US$ 2,350/MT FOB Hamburg as of November 29, 2024. This stagnation was a result of declining production costs and a weak demand in end-use industries, largely influenced by economic uncertainties in the Eurozone.
The dynamics of VSF feedstock played a crucial role in this trend with wood pulp inventories accumulating in European ports, adding pressure to the market. Meanwhile, contributing to lower input costs for VSF manufacturers, caustic soda prices declined by 3.9 per cent in Germany, Additionally, increasing from 2.0 per cent in October, inflation in the Euro zone was estimated at 2.3 per cent in November, according to Eurostat. These economic indicators suggest a cautious approach from downstream industries, further limiting demand for VSF.
Prices in the Asian VSF market, particularly in China, remained flat during the second half of November. This stability was attributed to low production costs and limited demand from both domestic and international markets. A critical feedstock for VSF, wood pulp exhibited mixed price movements. While softwood pulp prices initially rose and then declined, hardwood pulp prices continued a weak downward trend throughout November. Domestic wood pulp production increased, and high import volumes led to significant supply pressure in the market. A major consumer of wood pulp, the paper mill sector, showed limited offtake during this period. Similarly, driven by ample inventories and weak demand from end-use industries, caustic soda prices in China declined by 5.7 per cent.
The terminal textile sector in China underperformed as autumn and winter orders concluded, and raw material stocking remained lacklustre. Despite this, China’s textile and apparel exports demonstrated resilience. According to the General Administration of Customs, exports from January to October 2024 totaled 1.76 trillion CNY, reflecting a 3 per cent Y-o-Y increase. Textile exports grew by 5.8 per cent, while apparel exports rose by 0.7 per cent. Notably, exports in October alone increased by 8.5 per cent compared to the previous year, providing some optimism for the VSF market.
During this period, the VSF market in the United States remained balanced with prices holding steady at US$ 2040/MT CFR Texas. This stability was primarily due to steady import volumes from overseas markets and the low domestic production costs. Feedstock prices showed minimal fluctuations, with wood pulp prices remaining unchanged. However, caustic soda prices declined by 2.17 per cent, further easing production costs. Further, according to the US Bureau of Labor Statistics, the apparel manufacturing index declined by 0.2 per cent in October 2024 compared to the previous month, indicating weaker demand in the textile sector, which aligns with the flat VSF pricing trend.
