• Key w/w moves: Cotton -2%; Polyester -1%; HW DWP +1%; China-origin DWP +2%, medium-grade VSF +1%; and high-end VSF 0% and Lyocell +1%. Cotton’s premium to VSF is 43% (2021 average: 30%) and a 152% premium to polyester (2021 average: 150%). The VSF premium to polyester is currently 77% (2021 average: 94%).
  • VSF price was up 1% w/w: The VSF operating rate improved to 78% (was 77%) with the restart of idled line located in Jiangsu. VSF inventory days are down to 15.5 days (from 18.5 days). The theoretical VSF margin for Chinese producers improves but remains in the red at -USD 140/t and the VSF/DWP spread is up 4% w/w (+12% YTD). VSF price is expected to be stable to higher in the short term driven by cost and large quantity of pre-sales.
  • The Lyocell price was up 1% w/w: The operating rate of the lyocell industry was stable this week as a plant in Central China resumed operation. Lyocell demand from different areas is much divided recently and lyocell companies have to consider cost pressure while maintaining the relationship with both regular and new customers, so the price may rise further.
  • The spot hardwood price is now USD 1,135/t and the DWP/pulp spread is currently USD 318/t (this level generally supports preference for DWP production over paper pulp production). More offers were released with some trades concluded this week. The operating rate of Chinese DWP mills dipped slightly due to maintenance. In the import market, some hardwood DWP mill offered at USD 1,150/t and other suppliers gradually released the offers at the same level, except for the new LD Cellulose S.A. pulp mill who offered lower at USD 1,100/t. The price was resisted by downstream buyers, but large-scale VSF plants started to take offers.

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