On the eighth day of the first lunar month, the first working day after the Spring Festival, yarn mills have gradually resumed production in succession. Mills with a high proportion of local workers and suitable workshop temperatures recovered relatively quickly. Production has resumed well in Gaomi (Shandong) and Xuzhou (Jiangsu), while Xinjiang basically maintained operation throughout the holiday. At present, the industry operating rate has recovered to 57%, and pure rayon yarn operating rate to 33%.

Downstream resumption is relatively slow, mostly starting after the eighth or even the tenth day of the first lunar month. Trading sentiment between upstream and downstream has not yet picked up, and yarn mills have barely started deliveries as downstream buyers have not yet taken goods. Therefore, yarn prices have remained largely stable for the time being. Although some yarn mills have raised quotations, there are few firm deals. The general commodity market rallied sharply after the holiday, with cotton and PSF also surging, laying a positive foundation for a strong start to the year. Against the backdrop of strong fundamentals (low inventory and high consumption expectations), some VSF plants have quoted up by 200-300yuan/mt.

For rayon yarn, strong cost support is in place, but demand needs to be observed after downstream plants fully resume production. Based on post-holiday demand in recent years, performance has generally been modest. Therefore, the pass-through of raw material price increases to yarn and grey fabric is expected to be relatively slow.