Land reserve leads to production line shutdown! 31,200-ton biomass filament production line of Xinxiang Chemical Fiber suspended

Analysis of sector Experts on Market Impact

1. Supply Side: Phased reduction of viscose filament, which is a passive exit rather than permanent capacity clearance

The shutdown of 31,200 tons per year of biomass cellulose filament this time represents a substantial supply contraction in China's viscose filament sector. consider the core difference: it is a passive production suspension due to land reserve and not permanent capacity elimination. Xinxiang Chemical Fiber itself has a non-general offering of shares to build a high-condition biomass filament project, and there is a prolonged capacity replacement plan, so it is not a permanent reduction in sector capacity, however only a phased exit of capacity from the old plant. Short term (fourth quarter of 2026): With a reduction of 8,500 tons within the year, the spot supply of viscose filament contracts, which will support the spot price of viscose filament. The overall operating rate of the viscose filament sector is relatively high, and market inventory is at a neutral level. This reduction will ease the pressure on loose spot supply.

2. Product Structure Distinction: Viscose filament benefits, spandex is not affected by this production suspension

Xinxiang Chemical Fiber has simultaneously deployed two main lines: viscose filament and spandex; this production suspension only involves biomass cellulose filament, and the spandex production capacity is completely unaffected, so the logic of the spandex market remains unchanged. Biomass filament is mostly utilized in high-end textile fabrics and home textiles. The supply contraction of this sub-variety has enhanced the price resilience of high-end filament; the market of ordinary viscose staple fiber is unrelated to this incident.

3. Impact on the Enterprise Itself

Short term: Production will decline in the fourth quarter, and revenue and profit will shrink; however land compensation funds will be obtained simultaneously, offsetting part of the profit loss. Medium and long term: With the exit of the old plant, the company plans to complete capacity upgrading and replacement through a non-general offering of shares to build a high-condition biomass filament project. The future new production line will have higher product condition, focus on the high-end textile track, and optimize the product structure.

4. Risk Points

1) Downstream demand risk: If the terminal consumption of the textile sector is weak, the price increase space brought by supply contraction will be limited;

2) Progress of capacity replacement implementation: The construction progress of the new high-condition filament project determines when the future capacity will be replenished to the market;

3) Start-up flexibility of other peers: If the price of viscose filament rises, other filament companies will increase their start-up, which will offset the benefits of this reduction.

5. Summary and Judgment

This production suspension of Xinxiang Chemical Fiber is a phased supply contraction brought about by passive land reserve, rather than an active sector capacity clearance. The supply of viscose filament will decrease in the fourth quarter, which is a immediate benefit to the spot price of viscose filament and boosts the sentiment of the filament market; however it is a phased reduction. The medium and long term is determined by the implementation pace of the company's new capacity and the recovery of terminal textile demand. The spandex sector is not disturbed by this incident. Key tracking points: The market transaction of viscose filament, downstream textile orders, and the progress of Xinxiang Chemical Fiber's new filament project.