European VSF Prices Hold Steady as US and APAC Markets See Continued Increases in Mid-May 2024

In the third week of May, Viscose staple fiber (VSF) prices remained steady in the German market, primarily due to a balanced supply and demand situation. The stability in VSF prices coincided with favorable trends in the prices of key chemicals used in VSF production, such as a slight decrease in caustic soda prices and stable sulphuric acid prices. Additionally, the cost of raw material, wood pulp, stabilized after a minor increase the previous month. Local inventory levels remained sufficient, although international orders decreased during the week. Domestic demand continued to be the main driver of VSF downstream consumption. Reports indicated an increase in Germany's VSF exports to the US during the first quarter, contributing to the overall trade between the two countries, which amounted to €63 billion from January to March.

During this week, VSF prices saw a further increase in the Chinese market, mainly propelled by a rise in the price of the raw material, wood pulp. The spot price of wood pulp continued its upward trend. Despite various market developments, import prices are increasing, which is bolstering the prices of domestic needle and hardwood pulp spot goods. Moreover, VSF supply from overseas is still susceptible to frequent disruptions, while the European VSF market indicates signs of recovering consumption. Meanwhile, there are persistent expectations for a decrease in domestic prices. However, demand for VSF downstream remained stagnant, with no significant uptick in new orders; market participants primarily concentrated on fulfilling existing contract orders.

In the US market, VSF prices experienced a 0.25% increase compared to the previous week, largely due to higher import costs from China. At the same time, the price of wood pulp in China continued its upward trajectory. Moreover, In Q1 2024, there were signs of recovery in US home textiles imports, sparking cautious optimism within the industry amid a complex market landscape. Import figures showed a notable increase of 20 to 25% compared to the Q1 of 2023, reflecting a broad sectoral upswing. However, when compared to pre-pandemic levels, imports in Q1 2024 still fell short by 10-15%. India, a significant supplier, maintained its position, although there were indications of potential volume declines.

Furthermore, the global shipping industry is showing strong performance, leading to a rise in freight rates worldwide. Freight rates saw significant surges across different routes, including those in Europe, the Mediterranean, the US West Coast, and the East Coast. Several factors contributed to this surge, including geopolitical tensions impacting shipping capacity, detours affecting around 3,400 ships, and heightened demand in Europe and the United States.

In conclusion, analysts expect that VSF prices will likely fluctuate within a narrow range in the upcoming weeks, influenced by changes in both demand and raw material prices.