Debon Securities: Viscose filament opens up anti-involution, optimistic about the price elasticity in the golden September and silver October

According to the Zhitong Finance APP, Debang Securities released a research report stating that on September 22, industry leader Xinxiang Chem fired the first shot in the viscose filament industry's anti-involution campaign. According to the announcement from Xinxiang Chem, the company will conduct maintenance on 31,200 tons of viscose filament capacity on October 1, accounting for approximately 11.35%, which compresses industry supply. Against the backdrop of strong policy promotion for anti-involution, viscose filament companies are expected to achieve industry collaboration in the future, initiating a new round of anti-involution price increases. According to Baichuan Yingfu, as of September 22, the price of viscose filament was 43,500 yuan/ton. With industry supply being disrupted and demand driven by the "golden September and silver October," viscose filament is expected to experience several rounds of price increases.

Debang Securities' main viewpoints are as follows:

Natural silk alternative, downstream applications in high-end clothing

Viscose filament is a type of viscose fiber, also known as artificial silk or ice silk, made from dissolving cellulose from straw, tree bark, etc., and spinning it into a continuous, long regenerated cellulose fiber filament. Viscose filament has characteristics such as smoothness, coolness, breathability, anti-static properties, and vibrant dyeing. Among the 12 major textile fibers, its moisture content most closely meets the physiological requirements of human skin, and it is mainly used in high-end clothing and home textiles. The upstream of the viscose filament industry chain consists of raw materials, mainly cotton pulp, wood pulp, and bamboo pulp; the midstream involves the production and supply of viscose filament; and the downstream is widely applied in cotton textiles, knitting, silk, soft satin, and other weaving fields.

Xinxiang Chem resists involution, industry expected to actively collaborate

The production process of viscose filament releases a large amount of toxic and harmful gases and has high energy consumption. Under policy promotion, China's viscose filament industry has been continuously integrating and reshuffling in recent years, with the concentration of industry capacity continuously increasing, and currently only four companies remain. According to Baichuan Yingfu and company announcements, by the first half of 2025, the total industry capacity will be 275,000 tons, with Xinxiang Chem/Jilin Chemical Fiber/Yibin Haisite/Hubei Jinhui New Materials having capacities of 110,000/100,000/50,000/15,000 tons respectively. Most of the industry capacity is concentrated in Xinxiang Chem and Jilin Chemical Fiber, with a CR2 ratio of 76.36%, making it easier for the industry to initiate anti-involution, and self-regulatory behavior is more likely to occur.

On September 22, industry leader Xinxiang Chem fired the first shot in the viscose filament industry's anti-involution campaign. According to the announcement from Xinxiang Chem, the company will conduct maintenance on 31,200 tons of viscose filament capacity on October 1, accounting for approximately 11.35%, which compresses industry supply. Against the backdrop of strong policy promotion for anti-involution, viscose filament companies are expected to achieve industry collaboration in the future, initiating a new round of anti-involution price increases.

The peak season of golden September and silver October arrives, downstream demand continues to strengthen

In terms of domestic demand, the autumn and winter order stocking for home textiles has begun, and some manufacturers have increased their operating rates. According to the Global Textile Network subscription account, the operating rate of weaving enterprises has rebounded to 68.8%. Industry leaders, leveraging their scale and customer advantages, have locked in a large number of autumn and winter orders in advance. In terms of external demand, the extension of tariffs between China and the United States is favorable for the terminal textile and clothing market. The U.S. and EU are gradually placing autumn and winter sample orders, with improved export demand for workwear fabrics and environmentally friendly home textile fabrics, and foreign merchants' willingness to replenish stocks has increased. In August, export orders for workwear and functional fabrics in the Jiangsu and Zhejiang regions increased by 15%-20% month-on-month, and some leading enterprises have already locked in shipping schedules for October. According to the Chemical Fiber Information Network, in August, viscose filament exports reached 12,200 tons, a year-on-year increase of 37.24% and a month-on-month increase of 10%, reaching the highest value of the year Optimistic about Product Price Increases Driven by Demand in September and October

Resisting the pressure of competition, demand is improving, and we are optimistic about the price elasticity of products. According to Baichuan Yingfu, as of September 22, the price of viscose filament is 43,500 yuan/ton. The industry's supply is disrupted, and the demand driven by September and October is expected to lead to several rounds of price increases for viscose filament: assuming each round of price increase is 1,000-1,500 yuan/ton, it is expected to drive the profit elasticity of Xinxiang Chem (110,000 tons - 31,200 tons = 78,800 tons) and Jilin Chemical Fiber (100,000 tons) to be 60-90 million yuan and 80-110 million yuan, respectively.

Target Aspects

It is recommended to pay attention to: Xinxiang Chem (000949.SZ), Jilin Chemical Fiber (000420.SZ), etc.

Risk Warning

Policy changes, downstream demand not meeting expectations, etc