Viscose staple fibre prices flare up with each passing day

August 15, 2009 - China

Continued rebound of viscose staple fiber price is mainly driven by rising cotton prices considering that viscose fiber is an important alternative to cotton. From July 23 onwards, average cotton prices have risen 10 to 20 Yuan per ton per day, while from the beginning of July 24, viscose staple fiber prices have grown by 50 to 100 Yuan per ton, each day on an average.

With the arrival of peak season and coupled with higher cotton prices, analysts expect that price of viscose staple fiber will go even further. Historical data indicates that, viscose staple fiber price has been 3,000 Yuan per ton higher than cotton prices on an average and even 5,000 Yuan per ton higher when market supply is tight.

As a result of overall upward trend in cotton prices, viscose staple fiber price should at least have increased to 16,470 Yuan per ton according to the currently prevailing standard cotton price of 13,470 Yuan per ton on August 3, but Viscose staple fibre was quoting at 16,200 Yuan per ton on August 3.

In addition, the peak demand season for viscose fibers is approaching; so viscose staple fiber price is more likely to increase. Analysts expect that as demand season of viscose staple fiber will arrive, price of viscose staple fibers in September will reach 18,000 Yuan per ton, while decline of cotton acreage will also provide support to prices of viscose staple fibers.

In fact, in 2009, the world’s major cotton-producing countries have reported a reduction in cotton acreage. The US cotton acreage for the new 2009-10 season has declined by 7 percent. According to sample data collected by China Cotton Association in June, China's domestic cotton acreage in 2009 fell by 11.34 percent year-on-year.