• Most textiles came under pressure this week: ICE cotton -11%; VSF -7%; and Polyester: -5%.  
  • VSF prices giving back all its recent gains, down 7-9% w/w: The operating rate of VSF industry improved w/w from 72% to 77% as a large-scale VSF plant in North China raised its operating rate. As spinners did not take up much VSF, inventory days increased from 25.0 days to 26.5. Theoretical VSF margin for Chinese producers came under pressure and firmly in the red at -USD 85/t. The VSF/DWP spread is down 11% w/w (+7% YTD).   
  • Domestic and imported hardwood DWP prices down 1% w/w in China: Spot hardwood price is now USD 910/t and the DWP/pulp spread is currently USD 218/t (this level generally supports preference for paper pulp production over DWP production). The operating rate of Chinese dissolving pulp mills retuned to be low since Hunan Juntai converted to paper pulp production. Further pressure on DWP prices is likely now as VSF producers manage costs further considering VSF prices remain under pressure.
  • Key YTD moves: Cotton +37%; Polyester +15%; HW DWP +25%; China-origin DWP +13%; medium-grade VSF +12%; high-end VSF +13% and Lyocell -8%. Cotton is currently trading at a 62% premium to VSF (YTD average: 27%) and at a 207% premium to polyester (YTD average: 145%). VSF premium to polyester is currently 90% (YTD average: 95%).  

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