• Key YTD moves: Cotton +41%; Polyester +22%; HW DWP +28%; China-origin DWP +16%; medium-grade VSF +24%; high-end VSF +27% and Lyocell -8%. Cotton is currently trading at a 49% premium to VSF (YTD average: 25%) and at a 197% premium to polyester (YTD average: 141%). VSF premium to polyester is currently 99% (YTD average: 95%).
  • VSF prices flat to lower w/w with few trades concluded: The operating rate of VSF industry improved w/w from 58% to 60% and inventory days decreased from 23.5 days to 23.0. The VSF/DWP spread is down slightly w/w and is up 27% YTD. Theoretical VSF margin for Chinese producers now in the green at USD 21/t, supported by lower processing costs. According to CCF, in the ST, spinners are not expected to purchase large VSF volumes until their inventories drop further.
  • Slight pressure on DWP prices in China: New offers were limited this week as few trades took place. With the DWP/pulp spread currently USD 381/t, Hunan Juntai continued with DWP production, while Sun Paper was dependent on order intake. No clear on price direction currently as VSF operating rates continue to improve; however, some VSF plants still have pulp inventory, and some are using paper pulp as input.

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