• Key YTD moves: Polyester +20%; HW DWP +38%; China-origin DWP +29%; medium-grade VSF +11% and high-end VSF +15%. In contrast, Lyocell is down 5%.
  • VSF prices in the green again this week: Sateri and Tangshan Sanyou are seeing strong interest for medium-grade VSF around RMB 13.1-13.3k/t. The VSF operating rate improved further to 74% as some VSF plants in East China came back from maintenance. VSF inventory days dropped again this week to 25.5. The VSF/DWP spread improved by 1% w/w but is down 6% YTD. The theoretical VSF loss for Chinese producers narrowed to -RMB 364/t (+18% w/w). VSF price stability is likely.   
  • Black swan event in SA likely to provide support for DWP prices: In China, operating rates remain low, with DWP supply running down inventories mainly. With Sappi ceasing production at Saiccor due protests, uncertainty remains as to when production should resume. It is our understanding that employees are back at work, with the intention to resume operations asap; however, dependent on transportation normalising. In light of this, coupled with improving VSF prices, DWP price stability is likely.

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