The benchmark price of viscose staple fiber 1.2D settled at 14,400 CNY/ton at the end of August, a level that not only sets a new high for the year but also pushes the industry into a delicate balancing game—1,600 CNY/ton above the year's low and triggering two-year and three-year overbought alerts. For downstream spinning mills, this means a rigid rise in raw material costs that may not be fully passed on to final orders, squeezing profit margins from both ends.
Supply-Demand Logic Behind the High Price
Over the past 12 months, the average price of viscose staple fiber was 13,406 CNY/ton, and the current level is about 7.4% above that average, sitting at the top of its one-year range. Notably, the daily change was zero, indicating a market in wait-and-see mode at month-end, with buyers and sellers both looking for directional signals. This high-level plateau typically suggests no significant supply increase and a lack of follow-through buying demand.
Cost-side factors are the core support. Dissolving pulp, caustic soda, and other raw materials remain firm, coupled with high energy costs, pushing production costs notably higher than a year ago. Public industry data shows that theoretical production margins for major manufacturers have narrowed to near breakeven, explaining why factories are reluctant to cut prices even in a sluggish demand environment—lowering prices means losses.
Industrial Transmission and Procurement Strategy Adjustments
For downstream spun rayon yarn mills, a raw material price of 14,400 CNY/ton means an increase of about 200 CNY per ton of yarn compared with early August. If yarn prices cannot rise in tandem, gross margins will be further compressed. Historical patterns show that after viscose staple fiber prices break above 14,000 CNY/ton, yarn mills typically respond in two ways: reduce operating rates to cut raw material purchases, or increase the blending ratio with polyester staple fiber to alleviate cost pressure through substitution.
Currently, the polyester-viscose price spread is at a mid-level in recent years, and some mills have already started adjusting their formulas, which in turn may curb further upside for viscose staple fiber. For fiber producers, high prices improve short-term profitability, but if downstream output cuts transmit to weaker demand, the risk of a price correction will accumulate. The overbought alerts issued by industry bodies are a reminder of this fragile balance.
Regional and Foreign Trade Impact
Major consumption areas of viscose staple fiber are concentrated in textile clusters in Jiangsu, Shandong, and Fujian, where yarn mills face dual pressure from costs and orders. In foreign trade, due to exchange rate fluctuations and weak overseas demand, resistance to raising export yarn prices is significant. Some companies have begun negotiating price adjustment mechanisms with overseas clients to partially pass on raw material increases.
From a full-year perspective, viscose staple fiber prices have rebounded from a low of 12,800 CNY/ton to 14,400 CNY/ton, an increase of 12.5%. This trend resonates with other fiber varieties such as cotton and polyester, indicating an overall upward cycle in the chemical fiber sector. However, the pace of viscose price increases has clearly outpaced downstream products, and this scissors gap is unlikely to persist, warranting caution about potential pullbacks after the rally.