• Key YTD moves: Cotton +41%; Polyester +23%; HW DWP +29%; China-origin DWP +17%; medium-grade VSF +26%; high-end VSF +27% and Lyocell -8%. Cotton is currently trading at a 48% premium to VSF (YTD average: 24%) and at a 195% premium to polyester (YTD average: 140%). VSF premium to polyester is currently 99% (YTD average: 95%).    
  • VSF prices broadly stable this week: Power rationing in Jiangsu was relieved much this week and some units were running with higher operating rates. Some plants in other provinces also planned to raise the run rates. Accordingly, the operating rate of VSF industry dropped improved w/w from 56% to 58% and inventory days decreased from 25.0 days to 23.5. The VSF/DWP spread is down slightly w/w and is now up 28% YTD. Theoretical VSF loss for Chinese producers remains in the red but improves w/w to -USD 65/t (caustic soda down USD 80/t). VSF plants and spinners have plenty of unfulfilled contracts, which could provide support to VSF prices; however, the unequal distribution of orders could pressure prices.
  • DWP price stability continues: The DWP/pulp spread remains stable (USD 353/t). In China, Hunan Juntai switched back to dissolving pulp production. Sun Paper however indicated that the production schedule was dependent on whether the plant could receive sufficient DWP orders. Despite VSF plants generally running with lower operating rates, the trading mood may be better than that of October as some units may resume operation later. However, the DWP price is still under downstream pressure due to oversupply (CCF).

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