Fastmarkets RISI Global Paper Packaging Outlook

  • Key w/w moves: Cotton +2%; Polyester +3%; HW DWP +1%, China-origin DWP +2%, medium-grade VSF, high-end VSF and Lyocell all roughly flat w/w. Cotton’s premium to VSF has narrowed to 67% (2021 average: 30%) and a 190% premium to polyester (2021 average: 150%). The VSF premium to polyester is currently 69% (2021 average: 94%).
  • VSF prices +4% since the Chinese New Year (CNY): Some VSF units located in Hebei, Shandong, Jiangsu & Xinjiang reduced operating rates slightly due to the Winter Olympics and environmental issue. The VSF operating rate is now 81%, down from 85% prior to the CNY. VSF plants resumed operation earlier than buyers and spinners still had a large amount of feedstock inventory, so fresh business was inactive. Accordingly, VSF plants saw net growth of stocks due to suspension of logistics during CNY with VSF inventory days now at 24.5 days (17 prior to the CNY). The theoretical VSF margin for Chinese producers has improved to -USD 20/t & the VSF/DWP spread is up 1% w/w (+17% YTD).   
  • Hardwood DWP prices edge up slightly: In the Chinese DWP market, a plant in Central China is experiencing unsteady wood chip supply and might convert to paper pulp production. The spot hardwood price is now USD 910/t and the DWP/pulp spread is currently USD 300/t (this level generally supports preference for DWP production over paper pulp production). DWP prices could see further gains as the paper pulp price soared around the Chinese Lunar New Year and VSF price also rebounded (+9% YTD).  

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