- Key YTD moves: Polyester +20%; HW DWP +44%; China-origin DWP +33%; medium-grade VSF +11% and high-end VSF +13%. In contrast, Lyocell is down 1%.
- VSF market flat to down, lacking lustre: Demand is currently being filled for minimal requirements. The VSF operating rate ticked up 69%. VSF inventory days moved up to 25.5 days. The VSF/DWP spread weakened by 0.7% w/w and is down 10% YTD. The theoretical VSF loss for Chinese producers increased to -RMB 729/t. Based on current sentiment (slow downstream consumption), it is hard to see VSF prices improve.
- Imported DWP prices stable, while domestic prices play more catch-up: Chinese DWP mills continue to run steadily, albeit at lower levels. New price offers are out for domestic and import prices but appear to imply further stability, for now. Buying interest from downstream has moderated with orders filled on a need-only basis. Supply wise, the softwood market is tighter than hardwood. On this basis, softwood prices are likely to remain stable, with hardwood coming under some pressure.
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