Anticipation of growing supply and demand for VFY in 2024

VFY plants were running steadily in the first quarter of 2024. Jilin Chemical Fiber's new capacities were gradually launched and Xinxiang Chemical Fiber's capacity had also advanced, which was running steadily. The scale of other companies remained unchanged, and the total capacity of VFY industry had risen to 270kt/yr.

The export market was generally stable. Chinese market was affected by the Spring Festival in the first quarter, with reducing production and raw materials consumption, but the rising quotations of VFY plants before the holiday and the bullish expectation for the post-holiday market triggered the demand for building up stocks by traders and weaving mills, so the overall procurement performed well. In addition, jacquard and velvet as the popular varieties boosted VFY sales to some extent.

Export data for 2023 shows that overseas demand, which continues to perform well still supports VFY market, and the increase in capacity will encourage companies to continue to tap the export market. According to customs data, VFY (H.S. code: 54033190) export of China improved in Mar 2024, rising by 11.67% month on month and 12.47% year on year to 7.597kt. In the first quarter of 2024, the exports amounted to 21.389kt, which was 5.24% higher than the comparable 2023 level.

Under the consumption downgrade trend caused by the global economic situation, on the one hand, polyester is still a substitute for VFY, and on the other hand, the competitiveness of VFY against silk has also improved. The export volume of VFY in 2024 is expected to be around 98kt.

Considering the cyclical fluctuation in the stocking up and procurement by downstream sector, the overall demand in China local demand is expected to be stable to better in 2024, but the export orders of some fabrics may be affected by the influence of tariffs, while the direct export of VFY is still anticipated to recover, so the overall demand forecast is around 208kt.