Viscose glut subdues Lenzing

During the first half of 2013, high cotton inventories and surplus production capacities for viscose in China led to a significant fall in the price of cellulosic fibres.

Lenzing – which has just posted a 6.8% fall in sales for the first half of 2013 – reports that average viscose prices this year have been around €1.76 per kg, compared to €2.03 per kg in the first six months of 2012.

And although demand in the the nonwovens fibre market has remained strong, declining textile fibre prices also exerted some pressure on prices in the industry.

“Viscose fibres will remain an important pillar of our business, but further expansion projects will only be implemented if correspondingly high profitability can be achieved,” said CEO Peter Untersperger. “Current large-scale strategic investments such as the new Tencel production plant at the Lenzing site will continue as planned.”

Lenzing shipped a record amount of product in the first six months of 2013 – some 438,000 tons – but as a result of falling viscose prices, earnings before interest and tax (EBIT) fell by 27% to €103 million on sales of €989.9 million.

“Modal, Tencel and all nonwoven products made a significant contribution to stabilizing our business in the first half of this year,” said Friedrich Weninger of Lenzings management board.  “We also increased our capacity to produce our own pulp as a result of the conversion to dissolving pulp at the Paskov plant which achieved its targeted monthly production level six months ahead of schedule.”