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Insight | Time:Dec 29 2017 2:33PM
Is VFY market worth expecting in 2018?
 
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VFY market saw volatility in 2017. The price climbed up fast early this year as rising chemical fibers boosted excess restocking of downstream plants amid bullish expectation. However, the market stagnated briefly and then weakened during the months after Spring Festival when fiber price was still high but end-user demand was less than anticipated. The market further dropped in the middle of year as new capacities gradually started up while downstream plants cut operating rates. In the second half of year, VFY price was picked up somehow on rising cost, but hard to hike.


VFY producers saw rising cost in most time of 2017 and some producers witnessed negative cash flows. VFY price remained high in the first half of 2017 and pulp prices were bolstered as well. In the middle of the year, feedstock prices witnessed similar decline with that of VFY due to falling fiber price and weaker downstream demand resulting from strict environmental regulations. The market improved in the third quarter as pulp demand from VFY producers recovered. However, pulp supply was tight as some plants switched to produce paper pulp on rising prices. Meanwhile, prices of chemical materials all posted larger increase than VFY. Therefore, cost pressure for VFY producers was greater versus the first half of 2017.


VFY export of China in the first half of year was largely higher than the comparable 2016 level, but it was generally lower in the second half of year. There is increasing demand from overseas market, especially the appetite for continuous spinning fine-denier filament. After the new capacities start up next year, export market is still the major target.

VFY market may be still divided in 2018, with better demand for medium and high-end products while pressure of profitability and environmental protection for low-end companies, but export market may be still worth expecting.
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