Textile industry had a rough time in 2019. Cotton, polyester and viscose suffered own burden. As to spinning, in addition to reducing the burden and production, the conversion between different feedstock and yarns has attracted a lot of attention. In current buyer's market, the sensitivity of all parties to changes on the demand side has increased apparently. 

First, the situation of VSF and PSF. Although VSF price dropped to an extremely low, PSF fell a lot. Price spread narrowed from 5,000yuan/mt in early-2019 to 3,000yuan/mt in end-2019. For spinners who controlled cost, PSF was always attractive. 

 

Not only were the appropriated funds to purchase feedstock smaller, but polyester yarn was more economical supported by market feedback orders (end-users brand merchants also wanted to control cost and will intentionally increase the proportion of low-priced feedstock)and polyester market(price fluctuation brought operating space). Of course, rayon yarn mills will not completely switch production but they prefer polyester/rayon blended yarn which has similar prices but cheaper costs and considerable profits compared with pure yarn. Therefore, both vortex-spun and open-end rayon yarn also saw production shift. 


Of course, some pure spinning machines will be occupied, but the advantage were that it also dispersed rayon yarn competition burden, and to a certain extent, maintained the stability of operating rate of rayon yarn mills. If the influence of PSF on VSF was mixed, cotton did not be affected largely. Cotton slipped by about 2,000yuan/mt in early-2019 while VSF doubly dropped. In end-2019, cotton/rayon yarn price spread expanded to more than 3,000yuan/mt. 
 

Sales and profits advantages of rayon yarn compared with cotton yarn may not be so obvious, but the price was undoubtedly attractive. However, it was also because the "cost performance" was not enough. Cotton yarn mills mainly cut production. Polyester/cotton yarns were preferred, and the proportion of viscose flowing into them was not high. 

As to market demand, assuming that prices and market fluctuations of the three major feedstock remained similar to this year, the situation in 2020 will be similar to that in 2019. As to VSF, there was still a certain increase, but it was hard to give much strong support for the market. Stronger market fluctuations also require a combination of supply and demand changes.