After skyrocketing by 1,000yuan/mt in Mar, compact siro-spun and siro-spun rayon yarn surged another 1,000yuan/mt in Apr, leaving yarns of other spinning processes far behind. The last round of such consecutive sharp price hikes dated back to Oct 2020, when markets staged a drastic rebound following an extreme negative feedback amid the COVID-19 pandemic. Back then, the vast majority of commodities saw a sharp upturn. By contrast, the current rally of compact siro-spun and siro-spun yarn is a solo market performance without such broad market tailwinds.
First, cost escalation has driven the price surge of compact siro-spun and siro-spun yarns. VSF price has risen by 1,150yuan/mt since the start of the year, yet the gain is far lower than that of the two yarn varieties. To date, compact siro-spun yarns have climbed 2,950yuan/mt, while siro-spun yarns have increase by 2,470yuan/mt. This indicates supply-demand imbalance is also a key driving factor.
On the supply side, compact siro-spun and siro-spun rayon yarns remained trapped in deep losses throughout 2024-2025. Many spinners switched production to other yarn specifications, and some even suspended operation due to unsustainable losses. After two years of market reshuffling, the output of compact siro-spun and siro-spun rayon yarns has contracted significantly. Meanwhile, the explosive popularity of lyocell this year has further squeezed capacity for the two yarn types, pushing rayon yarns to rally sharply in tandem with lyocell yarns.
On the demand side, vortex-spun yarn is generally regarded as a barometer for rayon yarn demand. This year, the price gain of vortex-spun R30S stands at only 1,125yuan/mt, lagging behind the increase of VSF. Neither ring spun nor open-end yarns have outperformed VSF in price growth either. From a demand perspective, there is no fundamental support for such a high premium for compact siro-spun and siro-spun yarns. The core driver behind their current sharp rally is therefore contracted supply and short-term supply-demand mismatch.
The skyrocketing prices have greatly boosted the profitability of compact siro-spun and siro-spun yarn producers. The spinners still secure profits of hundreds of yuan per ton even calculated on a full-cost basis. Nevertheless, current market prices are largely nominal with thin transaction volume, casting doubt on the sustainability of such excessive premiums. Demand is expected to weaken after the traditional peak consumption season of Mar and Apr. However, most compact siro-spun yarn mills have secured pre-sales orders covering around one month of production. Hence, even with a slight narrowing of price premiums, compact siro-spun and siro-spun yarn prices will remain at a relatively high level in May.
