- The imported hardwood DWP averaged USD 1,051/t in April: This meant the price increased by 8.4% m/m; however, was down 4.6% y/y.
- Key w/w moves: Cotton -2%; Polyester +5%; HW DWP +3%; China-origin DWP +3%, medium-grade VSF +1%; and high-end VSF 0% and Lyocell +0%. Cotton’s premium to VSF is 48% (2021 average: 30%) and a 155% premium to polyester (2021 average: 150%). The VSF premium to polyester is currently 72% (2021 average: 94%).
- VSF was up 1% w/w: The VSF operating rate is lower at 78% (was 79%) as a Shandong-based VSF line was shut for maintenance. VSF inventory days are down to 21 days (from 22.5 days). The theoretical VSF margin for Chinese producers is deeper in the red at -USD 149/t and the VSF/DWP spread is down 4.3% w/w (+8% YTD). VSF market is expected to keep uptrend amid good pre-sales and driving force of raw materials, but the tempo of price rise may be divided in different areas.
- The Lyocell market was stable this week: The operating rate of the lyocell industry was stable at c.30%. The Lyocell market is likely to stabilize supported by the low operating rate currently, but there is resistance in further increase by lacking highlights in downstream segment.
- Domestic and imported hardwood DWP prices gain further traction, despite pushback from downstream plants: The spot hardwood price is now USD 1,100/t and the DWP/pulp spread is currently USD 315/t (this level generally supports preference for DWP production over paper pulp production). Chinese pulp mills continued to keep stable DWP production, and the operating rate stayed at a higher level in the past three years. Sappi’s mill might not publish new offer in May since the production had been affected by the heavy rainfall. Chilean DWP supply was reduced by half since the plant was producing paper pulp.
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