• US/China relations and the Xinjiang cotton sanction continue to weigh down on cotton prices: The ZCE cotton contract was down 4%, while cotton linter declined 6% w/w.
  • Low trading volumes saw medium-grade VSF prices drop 4%: This is roughly in line with polyester (-5%) and cotton (-4%). The VSF operating rate declined to 82% this week as one line was shut for scheduled maintenance in West China. Second week in a row of rising VSF inventory days – now at 14.5 days. With restocking currently taking place at downstream plants, it is hard to see VSF prices rise, for now.
  • Domestic DWP prices stable, while imports rise: Large HW suppliers have now targeted USD 1,100/t. Sun Paper maintained stable DWP production, while Hunan Juntai started switching to produce paper pulp. With cotton and VSF prices under pressure this past week, further DWP price increases are likely to be capped, but with tight DWP supply keeping the price in check. We note that the VSF/DWP spread is still up 25% YTD.  

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