Tianfeng: High production and low inventory, sticky short fiber welcomes the traditional peak season.

Tianfeng released a research report stating that viscose staple fiber is the most important regenerated fiber, and China is the main producer. In recent years, China's viscose staple fiber production capacity has been reduced, and industry leading companies have continued to increase market share through mergers and acquisitions and capacity expansion. Currently, the industry is in a state of high production and low inventory, and with the traditional peak demand season in the third quarter approaching, the industry's prosperity is expected to improve. Against the background of "anti-internal circulation", it is recommended to pay attention to the leading companies with scale advantages: Tangshan Sanyou Chemical Industries (600409.SH) and Xinjiang Zhongtai Chemical (002092.SZ). Tianfeng's main points are as follows: - Viscose staple fiber is the most important regenerated fiber, and China is the major producer. - Regenerated fibers include viscose fiber, acetate fiber, Lyocell, Modal, copper ammonia fiber, etc. By 2023, viscose fiber production will account for 80% of regenerated fiber production globally. Depending on the fiber length, viscose fiber can be divided into viscose staple fibers and viscose filament yarn, with viscose staple fiber being the largest segment product in China's viscose fiber market, accounting for about 95% (production share in 2024). - In terms of production, according to TextileExchange statistics, the global viscose fiber production in 2023 was approximately 6.3 million tons, with China's viscose fiber production reaching 4.12 million tons, accounting for 65% of global production, making it the largest producer. - In recent years, China's viscose staple fiber production capacity has been reduced, with high industry concentration (CR3>70%). - Due to the production of a large amount of waste acid and gas in the production process of viscose staple fiber, which pollutes the environment, the industry's new capacity is constrained by relevant environmental protection and industrial policies. Furthermore, in the period from 2019 to 2023, amidst industry overcapacity and long-term losses, combined with the slowdown in demand due to trade frictions, some outdated production capacity has been phased out, and there is a lack of willingness to put new capacity into operation. The total domestic viscose industry production capacity has decreased from 5.17 million tons in 2021 to 4.81 million tons in 2024. - In recent years, industry leading companies have continued to increase market share through mergers and acquisitions and capacity expansion. As of 2024, the top three companies in terms of industry capacity are Sateri (1.8 million tons), Xinjiang Zhongtai Chemical (880,000 tons), and Tangshan Sanyou Chemical Industries (800,000 tons), with a CR3 of 72%. - The industry is currently in a state of "high production and low inventory", and attention should be paid to price and profit recovery. Since 2025, viscose staple fiber has shown a state of high production and low inventory, and with the traditional peak demand season in the third quarter approaching, the industry's prosperity is expected to improve. Every July, downstream industries have concentrated purchases, and usually viscose staple fiber inventory depletion occurs in the second half of the year. Currently (as of 25/9/5), the operating rate of the viscose staple fiber industry is 88.6%, the highest level in the past five years for the same period; at the same time, factory inventory levels are at 128,000 tons, below the average inventory levels of 187,000 tons for the years 2020-2024. - The downstream demand is mainly in yarns, with the non-woven fabric sector providing demand growth. The downstream applications of viscose staple fiber are mainly divided into two categories: yarns (including cotton yarns and blended yarns) and non-woven fabrics (non-woven fabrics), used widely in the textile and clothing sector. Yarns are the main consumption area of viscose staple fiber, while in recent years, non-woven fabrics have become the main source of demand growth for viscose staple fiber. From 2014 to 2024, China's apparent consumption of viscose staple fiber increased from 2.929 million tons to 4.348 million tons, with an annual compound growth rate of 4.0%. In the first seven months of 2025, the cumulative apparent consumption reached 2.528 million tons, an increase of 4.5% year-on-year. - Against the background of "anti-internal circulation", it is recommended to pay attention to leading companies with scale advantages. - Tangshan Sanyou Chemical Industries (600409.SH): The company has outstanding differentiation advantages in viscose fiber, with an annual production capacity of 800,000 tons of viscose staple fiber (40% mainly ordinary fibers, 60% mainly differentiated, customized, high-end fibers, including high white fibers, Modal fibers, flame-retardant fibers, environmentally friendly fibers, regenerated fibers, protein fibers, Chinese red fibers, and other related varieties), making it the third largest viscose staple fiber producer in China, with a market share of about 17%. The company's differentiated viscose staple fiber products lead the industry, and is the first company in China to pass the European first-class ecological textile quality certification. - Xinjiang Zhongtai Chemical (002092.SZ): The company has an advantage in integrated circular economy, relying on the rich natural resources of coal, raw salt, limestone, etc. in Xinjiang area, and has developed into a leading enterprise with two main businesses: Shanghai Chlor-alkali Chemical and viscose textile industry. The company has a viscose fiber production capacity of 880,000 tons per year, making it the second largest producer in China. Risk warning: Risks of fluctuation in viscose raw material prices, this report is based on actual data, environmental risks, risks of continued economic downturn triggered by overseas economies.