• Key 2021 YTD moves: Cotton +45%; Polyester +23%; HW DWP +24%; China-origin DWP +15%; medium-grade VSF +7%; high-end VSF +9% and Lyocell -10%. Cotton’s premium to VSF averaged 30% and averaged a 150% premium to polyester. VSF premium to polyester averaged 94%.
  • A good start to the year for VSF as prices rise: The VSF operating rate improved to 79 as some VSF units were running with higher operating rates and some lines that had been idled for a long time were removed from the capacity list starting 2022. More orders were signed this week and spinners took delivery of VSF stock, so VSF inventory days reduced steadily to 22 days. Theoretical VSF margin for Chinese producers improved but firmly in the red at -USD 118/t. VSF/DWP spread +5% w/w (+5% YTD).   
  • Imported hardwood DWP prices steady: The average imported hardwood price during Oct-Dec 21 was USD 933/t (July-Sept 21: USD 1,012/t). The spot hardwood price is still USD 905/t and the DWP/pulp spread is currently USD 150/t (this level generally supports preference for paper pulp production over DWP production). Despite this, in the Chinese market, two large-scale pulp mills switched back to DWP production this week. Based on current dynamics (increasing DWP supply and demand as well as rising VSF operating rates), DWP price stability is likely.  

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