• Key YTD moves: Cotton +43%; Polyester +19%; HW DWP +27%; China-origin DWP +15%; medium-grade VSF +23%; high-end VSF +26% and Lyocell -7%. Cotton is currently trading at a 54% premium to VSF (YTD average: 25%) and at a 210% premium to polyester (YTD average: 142%). VSF premium to polyester is currently 101% (YTD average: 96%).    
  • VSF prices down 1% w/w: The VSF market was bearish as spinners held higher feedstock inventory, with fresh procurement limited. The operating rate of VSF industry improved w/w from 60% to 69% as the run rate of Xinjiang-based VSF units improved. Inventory days increased from 23.0 days to 24.0 and the VSF/DWP spread is down 2% w/w and is up 24% YTD. Theoretical VSF margin for Chinese producers more than doubled w/w to USD 50/t, supported by lower processing costs. Currently, CCF view end-user demand as dreary with ST bearish expectations. However, large-scale VSF plants supported by ample pre-sales likely to provide support to prices.
  • Slight pressure on DWP prices in China (import DWP down 1% vs. domestic DWP down 0.7%): However, CCF noted a great divergence in the south hemisphere as the higher price of FSC certified pulp stayed at USD 960/t. DWP/pulp spread is currently USD 373/t, and Hunan Juntai continued with DWP production this past week.

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