China Securities Co.,Ltd.: Supply and demand resonance in viscose staple fiber; recommend paying attention to leading companies.

China Securities Co.,Ltd. released a research report stating that at the current stage, the supply side of viscose staple fiber has formed a new pattern of "high concentration + limited new additions," while the demand side has multiple drivers of "cotton substitution + rising demand from vortex spinning/non-woven fabrics." With supply and demand resonating in viscose staple fiber, the price and profit center is expected to rise, and it is recommended to pay attention to leading companies with relatively large viscose staple fiber production capacity. The main views of China Securities Co.,Ltd. are as follows: Core View On the supply side, the viscose staple fiber industry structure is highly concentrated and future new capacity is limited. Since August 2025, the domestic viscose staple fiber industry operating rate has remained at a relatively high level of above 85%, while the industry has entered a destocking cycle, with current inventories already close to the lowest level since 2020. On the demand side, global cotton supply is expected to be tight. Since the beginning of this year, the cotton-viscose staple fiber price spread has widened, enhancing the cost-effectiveness of viscose staple fiber and driving substitution demand. At the same time, downstream vortex spinning and non-woven fabrics are expected to support medium- to long-term demand for viscose staple fiber. With supply and demand resonating in viscose staple fiber, the industry is expected to enter a new recovery cycle. Cotton-viscose price spread gradually widening; substitution demand may drive a pickup in viscose staple fiber Viscose staple fiber has performance similar to cotton and can achieve partial substitution. As of the end of September this year, the cotton-viscose staple fiber price spread had already reached a relatively high historical percentile since 2015. Meanwhile, according to USDA forecasts, global cotton may experience production cuts and destocking in 2026/2027, while domestically, due to policy regulation and the impact of high temperatures in Xinjiang, cotton output is expected to decline, and the cotton price center is expected to rise, thereby supporting substitution demand for viscose staple fiber and price increases. In the short term, the domestic viscose staple fiber industry currently shows the prosperity characteristics of "high operating rate + low inventory." Supply side: High concentration structure formed, limited new industry capacity Under the dual effects of policy guidance and market-oriented competition, domestic viscose staple fiber capacity has gradually stabilized since 2019, and planned future new capacity is relatively limited. At the current stage, the viscose staple fiber industry structure is highly concentrated, with the top three companies' market share exceeding 70%, significantly enhancing the pricing power of leading enterprises. At the same time, under the anti-involution backdrop, disorderly price competition is expected to be avoided. Demand side: Vortex spinning and non-woven fabrics are expected to support improving medium- to long-term demand for viscose staple fiber In 2025, domestic demand for viscose staple fiber is mainly concentrated in yarn (70%) and non-woven fabrics (30%). In the yarn sector, with the rapid expansion of vortex spinning capacity in recent years, viscose staple fiber has strong processing adaptability, and demand is expected to benefit fully. In addition, the share of non-woven fabrics in downstream demand for viscose staple fiber has shown a trend of gradual increase, and domestic non-woven fabric output has grown by more than 5% for two consecutive years. Research Nester expects the global non-woven fabric industry size to achieve a compound annual growth rate of 8.6% from 2025 to 2037, so non-woven fabrics may become another growth pole for downstream demand for viscose staple fiber. Risk warning: Downstream demand for viscose staple fiber falls short of expectations; prices of cotton and other substitute fibers decline; raw material price fluctuations; international trade friction risks; new capacity exceeds expectations; statistical calibers of different data sources may differ or contain errors.