• The imported hardwood DWP averaged USD 969/t in March (+0.7% m/m and -1.4% y/y): The average DWP price for January-March 2022 was USD 929/t (-0.5% y/y and -0.5% q/q).
  • Key w/w moves: Cotton -1%; Polyester -1%; HW DWP +2%; China-origin DWP +5%, medium-grade VSF +1%; and high-end VSF 0% and Lyocell +2%. Cotton’s premium to VSF is 63% (2021 average: 30%) and a 182% premium to polyester (2021 average: 150%). The VSF premium to polyester is currently 73% (2021 average: 94%).
  • VSF was up 1% w/w: The VSF operating rate is lower at 69% (was 74%) as more VSF units were shut for maintenance this week and spinners were active to replenish stocks. Accordingly, VSF inventory days are up to 24 days (from 21.5 days). The theoretical VSF margin for Chinese producers is deeper in the red at -USD 159/t (higher DWP and chemical prices) and the VSF/DWP spread is up 0.6% w/w (+12% YTD). The VSF market is boosted by cost and maintenance of the units and the price is expected to go up after Tomb Sweeping Festival.
  • Domestic and imported hardwood DWP prices gain further traction:The spot hardwood price is now up to USD 1,000/t and the DWP/pulp spread is currently USD 279/t (this level generally supports preference for paper pulp production over DWP production). Chinese DWP mills maintained higher operating rates with steady operation from Sun Paper and Hunan Juntai. Although there was increasing supply in China, the arrival of imported goods was mostly delayed. According to CCF, Sappi has offered DWP at USD 1,080/t. There appears to be further upside for DWP prices; however, this will be dictated by downstream demand.

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