- Key w/w moves: Cotton +5%; Polyester -4%; HW DWP stable China-origin DWP +1%, medium-grade VSF +1% w/w; and high-end VSF and Lyocell stable. Cotton’s premium to VSF is 63% (2021 average: 30%) and a 180% premium to polyester (2021 average: 150%). The VSF premium to polyester is currently 72% (2021 average: 94%).
- The VSF market activity failed to extend the bullish streak last week: COVID cases were increasing sharply during the weekend, which had almost covered all of textile provinces in East China. The trans-provincial logistics were seriously affected, and some appeal enterprises even stopped production. The VSF operating rate is lower at 80% as some Xinjiang and Sichuan-based plants cut the run rates. VSF inventory days are down to 19.5 days. The theoretical VSF margin for Chinese producers is still in the red at -USD 113t and the VSF/DWP spread is stable (+12% YTD).
- Domestic hardwood DWP +1% w/w, with the spot softwood import price +8% w/w: The spot hardwood price is stable at USD 975/t and the DWP/pulp spread is currently USD 300/t (this level generally supports preference for DWP production over paper pulp production). Chinese DWP mills kept stable operating rates as supply remains tight. New business was limited for imported hardwood DWP, and suppliers continued to fulfil contracts around USD 980/t.
- DWP import data for February 2022 was released: Total imports declined by 8% y/y and were down 24% m/m to 240kt. Imports from South Africa increased by 17% y/y and were up 69% m/m to 16.6kt (7% of total imports), with an implied value of USD 974/t (Jan 22: USD 989/t).
Download Report
