CITIC Securities: Tight supply and demand for viscose filament is expected to drive a step-up price increase, focusing on the profit elasticity of leading companies

The Zhitong Finance App learned that CITIC Securities released a research report saying that export demand continues to grow, stock supply is close to full capacity, and the viscose filament industry is expected to enter a phase of tight supply and demand and rising prices. The increase in traditional clothing consumption in India is driving the export volume of Chinese viscose filament. The industry's export volume increased 18.2% year on year to 114,000 tons in 2025, and further increased by 30.9% year on year in the first half of 2026. Meanwhile, the domestic industry operating rate has risen to 89.8% in 2025, and semi-continuous spinning production capacity may face pressure from policy elimination, environmental protection transformation and relocation. The bank expects the industry to show a gap between supply and demand in 2026-2028, and product prices will be upward elastic. Focus on recommending leading companies.

CITIC Securities's main views are as follows:

India's market expansion has driven exports to become a core source of growth in demand for viscose filaments.

According to Baichuan Yingfu, in 2025, China's viscose filament exports increased 18.2% year on year to 113,600 tons, accounting for 44.4% of domestic production; in the first half of 2026, the export volume was about 67,000 tons, up 30.9% year on year. Among them, in 2025, China exported 70,200 tons to India, accounting for 61.8% of total exports, and India and Pakistan together accounted for 84.2%. Indian sari, traditional clothing and women's clothing fabrics have a stable demand for high-gloss, strong draping fibers, and the increase in the supply of viscose filaments in India is relatively limited. The bank believes that Chinese companies are becoming the main bearers of increased demand in the Indian market.

High concentration is compounded by environmental restrictions, and there is limited room for further release of the supply of viscose filaments.

According to Baichuan Yingfu, the effective production capacity of domestic viscose filament will be about 285,000 tons/year in 2026. Among them, the two leading companies will have an effective production capacity of about 110,000 tons/year, and the industry's CR2 will reach 78%. The operating rate of the industry reached 89.8% in 2025, and production fell 2.0% year-on-year to 130,800 tons in the first half of 2026, indicating that the stock of equipment is already at a high load level. At the same time, the “Industrial Structure Adjustment Guiding Catalogue (2024 edition)” issued by the National Development and Reform Commission included semi-continuous spunbond filament production lines in the elimination category. The relocation, environmental protection transformation, and withdrawal of stock devices may further restrict effective supply. The bank expects the industry's supply and demand gap to be around 10,000 tons in 2026-2028, and industry inventory and supply flexibility may continue to decline.

Tight supply and demand are expected to drive a step-up price increase, and emphasis is placed on the profit elasticity of leading companies.

According to Baichuan Yingfu, the average price in the viscose filament market rose from 36,900 yuan/ton in 2020 to 43,500 yuan/ton in 2025. The overall price during this period showed “maintenance after rise” operating characteristics; in March 2026, the market price was further raised by 1,000 yuan/ton to 44,500 yuan/ton, and has remained stable since then. According to the calculation of a single company's 110,000 tons/year production capacity, 90% operating rate, 13% VAT rate, and 15% income tax rate, every 1,000 yuan/ton increase in product prices is expected to increase net profit by about 74 million yuan; a price increase of 2,000 yuan/ton corresponds to an increase of about 149 million yuan in net profit. Industry leaders are expected to be the main beneficiaries of rising prices and increased industry concentration.

Investment strategy: Both leading companies have a production capacity of about 110,000 tons/year of viscose filament, and are direct beneficiaries of improved industry supply patterns and product price increases. Among them, companies with a higher proportion of continuous spinning, more stable device operation, and stronger export customer resources are expected to gain greater profit flexibility and room for market share growth.

Risk factors: Overseas demand falls short of expectations, risk of changes in export policies, investment of new production capacity exceeds expectations, backward production capacity withdrawal progress falls short of expectations, product price increases below expectations, raw materials and energy costs rise.