According to the Zhittong Finance and Economics app, Citic Securities released a research report stating that viscose staple fiber is one of the three major textile fibers, which has both synthetic and natural fiber advantages. On the supply side, after experiencing two rounds of expansion, the industry's prosperity is accelerating reshuffle under pressure, and the industry's CR3 has risen from 24% in 2017 to 71% in 2023, and there will be no new production capacity in the next two years. At the same time, the delivery of more than 10 million tons of pulp capacity under construction will suppress the price of dissolving pulp, and the cost of viscose staple fiber materials will remain stable. On the demand side, the inventory of the domestic and foreign textile and apparel markets reached a high point in Q1 2023, and it is expected to gradually enter the active replenishment phase, while new downstream products such as non-woven fabrics are expected to boost the industry's prosperity. Combining with the current high operating rate and low inventory in the industry, it is recommended to seize the investment opportunities in the viscose staple fiber industry.

The main points of the Citic Securities research report are as follows:

Viscose staple fiber is one of the three major textile fibers, combining the advantages of both synthetic and natural fibers.

Viscose staple fiber uses natural high molecular cellulose as raw material, which is made into regenerated cellulose fibers after a series of complex chemical and physical changes. It has the characteristics of good moisture absorption and soft hand feel. Its upstream raw materials are mainly cotton pulp and dissolving pulp, and its downstream products are mainly human cotton yarn, blended yarn, and non-woven fabrics. Its products are easy to dye, do not generate static electricity, have strong moisture absorption, can achieve wrinkle-free finishing through finishing, and have both synthetic and natural fiber advantages with silk-like fluffiness and softness.

On the supply side, the industry's prosperity is continuously under pressure, and the pattern is constantly optimized.

After experiencing two rounds of large-scale capacity expansion, the Viscose staple fiber industry has accelerated reshuffle under long-term pressure since 2017. According to Zhuochuang Information, the industry's CR3 has risen from 24% in 2017 to 71% in 2023, and the industry's total capacity has decreased from 5.3 million tons in 2021 to 4.915 million tons in June 2024, with no new production capacity in the next two years. At the same time, in terms of cost, because dissolving pulp and pulp production lines can be switched, Zhuochuang Information predicts that more than 10 million tons of pulp capacity under construction will be put into the market in the next two years, which will suppress the price of dissolving pulp, and the cost of viscose staple fiber will remain stable.

On the demand side, downstream inventory continues to decline, and high operating rates and low inventory promote the prosperity of the industry.

According to Wind, In Q1 2023, the inventory turnover days of companies in the Citic Textile and Apparel sector and the seasonally adjusted inventory-to-sales ratio of the US clothing industry have both reached a peak of nearly one cycle, after which inventory continues to be depleted. In addition, the rapid growth of new downstream demand such as non-woven fabrics is also expected to boost the prosperity of the industry. According to Zhuochuang Information, the year-on-year growth rate of apparent consumption of viscose staple fiber in 2023 is 10.2%, which is at a high level. At present, the industry operating rate and inventory are respectively at high and low since 2020. The arrival of the downstream active replenishment cycle is expected to start a new cycle of prosperity in the industry.

It is recommended to pay attention to the elasticity of the leading performance of viscose staple fiber products as prices rise before the peak season arrives.

According to Shengyishe and Zhuochuang Information, since June, the price of viscose staple fiber has fluctuated upwards. As of the end of June, the domestic ex-factory price of 1.2D*38mm viscose staple fiber was 13,440 yuan/ton, up 1.66% from the price of 13,220 yuan/ton at the beginning of June. The price increase achieved in the off-peak season of June also reflects the current high operating rate, low inventory, and tight supply in the industry. With the gradual arrival of the peak season of demand and the resonance of downstream textile and apparel replenishment cycles, the price of viscose staple fiber is expected to exceed the threshold of 14,000 yuan/ton this year. In the medium and long term, with the stimulus of the global interest rate cycle to the demand side and the resonance of the three-cycle, the price is expected to reach the historical high of 15,500 yuan/ton.

Investment strategy:

Risks of significantly declining market demand, significantly expanding supply, greatly fluctuating product prices, fluctuating stability of raw material supply, intensified competition in the same industry, and safety production.