• Key w/w moves: Cotton +1%; Polyester +1%; and HW DWP, China-origin DWP, medium-grade VSF, high-end VSF and Lyocell all flat w/w. Cotton’s premium to VSF is currently 72% (2021 average: 30%) and a 189% premium to polyester (2021 average: 150%). The VSF premium to polyester is currently 68% (2021 average: 94%).
  • VSF prices stable this week: There was limited interest from downstream sector with the approach of Chinese Lunar New Year, though there was still sporadic procurement. The VSF operating rate improved from 84% to 85% as one more line located in Yuncheng (Jiangsu province) restarted production this week. VSF inventory days reduced further from 17 days to 14. The theoretical VSF margin for Chinese producers is still in the red at -USD 70/t. VSF/DWP spread flat w/w (+11% YTD).   
  • Imported hardwood DWP prices steady: The spot hardwood price is still USD 905/t and the DWP/pulp spread is currently USD 312/t (this level generally supports preference for DWP production over paper pulp production). Based on current dynamics (stable domestic production and limited incremental imported DWP in Q1; rising VSF operating rates, coupled with rising pulp prices), DWP price stability is likely going into the Chinese Lunar New Year next week.

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