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Why does rayon grey fabric market not turn around?
 Recently, due to uncertain external environment and dropping price of upstream feedstock, downstream manufacturers become cautious buyers and sellers. Demand for rayon grey fabric continues to be weak, and inventory burden is relatively high. Some weavers in Shandong Gaomi, Hebei and Shaanxi cut or halt production and others shift to produce polyester/rayon fabric. 

1. Demand narrows and price drops 
 
Price of upstream feedstock goes lower and downstream manufacturers mostly stand on the sidelines as they are worried that grey fabric price will further move down, resulting in blockage of sales. Major conventional products decrement is mostly above 0.30-0.50yuan/m with some are around 1.00yuan/m. R60Sx60S 90x88 65" (air-jet) in Northwest China moved down from 5.00yuan/m in early 2019 to current 4.40-4.50yuan/m. R45Sx45S 100x76 63" in Shandong Gaomi dropped from 5.00yuan/m to current 3.80-3.90yuan/m. Due to large losses of R45S rayon fabric, weavers in Shandong and Jiangsu mostly cut production in late July. Many fabric mills in Shandong, Hebei and Shaanxi shift to produce polyester/rayon fabric. 

2. High inventory: unbearable burden 
 
Due to short-term tolerable sales in cotton fabric market, demand was mostly weak after Tomb Sweeping Day Holiday in Apr. Especially after escalating tensions in May, operating environment of rayon grey fabric market was broken. In line with ups and downs of the external environment, market sentiment continued to ferment, rayon grey fabric market turned down sharply, and there were defaults or even cancellation of orders in earlier stage. In addition, due to continuous hot weather, seasonal demand weakened, and backlog of finished goods in weaving mills was heavier. Inventory burden of textile mills in Shandong Gaomi, Hebei and Shaanxi was large, and there was production cut or high-temperature vacation.  

In summary, due to strong risk aversion in the market, risk tolerance was relatively fragile. Rayon fabric mills mainly stood on the sidelines, and overall sales were unsmooth. Amid uncertain external environment, overall supply and unchanged demand, confidence was still insufficient and the price will be weak. 
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