• Key YTD moves: Cotton +15%; Polyester +22%; HW DWP +38%; China-origin DWP +26%; medium-grade VSF +15% and high-end VSF +16%. In contrast, Lyocell is down 5%.
  • VSF prices tick up slightly this week: The VSF operating rate improved to 78% as units in Southeast China came back from maintenance. VSF inventory days dropped slightly again this week to 22.5 as spinners appeared less eager to build up stocks. The VSF/DWP spread improved w/w and is now flat YTD. The theoretical VSF loss for Chinese producers is still in the red at -RMB 121/t as production costs increased further (caustic soda and sulphuric acid).  VSF has been gaining traction; however could be put on hold now with a resurgence of COVID in China.
  • DWP prices remain stable: The Chinese market was stable this week. With the DWP/pulp spread at c.USD 317/t, this is likely to encourage further DWP price stability, while local producers favour DWP production. Hunan Juntai and Sun Paper were both producing DWP, while Chenming Huanggang is still testing to produce DWP.

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