• Key w/w moves: Cotton +4%; Polyester +3%; HW DWP flat; China-origin DWP -1%; medium-grade VSF +3%; high-end VSF +3% and Lyocell +3%. Cotton’s premium to VSF is currently 76% (2021 average: 30%) and a 198% premium to polyester (2021 average: 150%). The VSF premium to polyester is currently 69% (2021 average: 94%).
  • VSF prices rise further this week as large producers lead the way: The VSF operating rate improved from 79% to 84% some VSF plants further raised operating rates and the Yancheng-based VSF line restarted production. Spinners took delivery of VSF with faster speed and VSF plants focused on fulfilling contracts, so VSF inventory days reduced further from 22 days to 17. The theoretical VSF margin for Chinese producers improved but firmly in the red at -USD 72/t. VSF/DWP spread +5% w/w (+10% 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 143/t (this level generally supports preference for paper pulp production over DWP production). VSF plants have maintained normal procurement before the Chinese Lunar New Year. Based on current dynamics (increasing domestic DWP supply and demand as well as rising VSF operating rates, coupled with rising pulp prices), DWP price stability is likely.  

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