• Key YTD moves: Polyester +14%; HW DWP +51%; China-origin DWP +43%; medium-grade VSF +20% and high-end VSF +25%. In contrast, Lyocell is only up 4%.
  • VSF prices stable this week but imported forward cargoes traded around 12,000 yuan/t: The VSF operating rate climbed to 80% as a Sichuan-based VSF facility was running harder. VSF inventory days ticked up slightly to 23 days as spinners took delivery at a slower pace. The VSF/DWP spread is only up 1% YTD. The theoretical VSF loss for Chinese producers narrowed to RMB 170/t this week.  
  • DWP prices stable, with new offers in line with April: In the domestic market, Chinese operating rates were stable; however, inventories are ticking up on the back of slower sales recently causing Sun Paper and Hunan Juntai to convert to paper pulp. The viscose industry forum takes place next week, will be key determinant if there is any pricing pressure on DWP, which appears more likely now in view of VSF fundamentals.

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