• Key w/w moves: Cotton +4%; Polyester +10%; HW DWP +0%; China-origin DWP +2%, medium-grade VSF +2%; and high-end VSF +1% and Lyocell +1%. Cotton’s premium to VSF is 33% (2021 average: 30%) and a 119% premium to polyester (2021 average: 150%). The VSF premium to polyester is currently 65% (2021 average: 94%) and the lyocell premium to VSF is currently 11%.
  • VSF price was up 2% w/w: The VSF operating rate is drops to 75% (from 78%) as Sateri shut some lines for maintenance and the schedule of raising operating rate by the plant in West China was delayed. VSF inventory days tighten further to 12.5 days (from 13.0). The theoretical VSF margin for Chinese producers improves but remains in the red at -USD 92/t and the VSF/DWP spread improved by 2% w/w (+17% YTD).  
  • The Lyocell price was up 1% w/w: Lyocell demand continued to perform well, especially from open-end yarn, but there was less buying interest at RMB 17,500/t. Some lyocell units restarted production this week, but the production had not been confirmed and the operating rate of the industry remained at 50%.
  • The spot hardwood price is up 4% to USD 1,190/t and the DWP/pulp spread is currently USD 326/t (this level generally supports preference for DWP production over paper pulp production). Chinese dissolving pulp mills kept stable operation as Sun Paper was running steadily and Hunan Juntai planned to switch back to DP production.   

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