• Key YTD moves: Polyester +13%; HW DWP +51%; China-origin DWP +43%; medium-grade VSF +15% and high-end VSF +14%. In contrast, Lyocell is only up 4%.
  • VSF prices drop c.4-9% w/w: The VSF operating rate dropped 300bps to 77%, impacted by maintenance of some Jiangsu-based units. Spinners are still taking delivery of goods to meet the minimal requirements but saw VSF inventory days ticked up from 23 days to 25 days. The VSF/DWP spread dropped 7% w/w and is now down 6% YTD. The theoretical VSF loss for Chinese producers increased to RMB 626/t this week.  
  • DWP trades limited with prices stable as new offers confirming price stability for now: In the domestic market, Chinese operating rates are lower as Hunan Juntai converted to paper pulp. Sun Paper (Yanzhou) is also considering conversion to paper pulp. It also appears domestic DWP volumes are slower with less appetite to sell pulp on credit. With current VSF prices and paper pulp futures, this will be weighed up vs. tight DWP supply.   

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