- Key YTD moves: Cotton +40%; Polyester +35%; HW DWP +29%; China-origin DWP +17%; medium-grade VSF +26%; high-end VSF +25% and Lyocell -8%. Cotton is currently trading at a 48% premium to VSF (YTD average: 23%) and at a 167% premium to polyester (YTD average: 137%). The VSF premium to polyester is currently 80% (YTD average: 95%).
- VSF prices increases again this week, with high-end VSF leading gains: Jiangsu-based VSF plants were still under the pressure due to short energy supply and accordingly the operating rate of VSF industry dropped further from 60% to 56%, while inventory days decreased from 29.5 days to 26.5. This was driven by good off-take from spinners. The VSF/DWP spread is up by 3% w/w and is now up 26% YTD. The theoretical VSF loss for Chinese producers remains in the red and widens to -USD 94/t due to chemical cost pressures.
- Imported hardwood DWP down 1% w/w to USD 940/t: Encouragingly, more trades took place this past week. Imported softwood DWP and domestic DWP prices remain stable. Chinese DWP mills continue to producer paper pulp, while DWP is still available for sale. The DWP/pulp spread remains stable (USD 349/t). DWP prices are likely to remain range bound now as higher VSF prices are tempered by weaker pulp markets and low VSF utilisation rates.
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