VSF market starts the new year with triple benefits

Most chemical fiber products surged to start the Year of the Ox. Besides common benefits, there are three additional ones to VSF compared to previous years.

1. Downstream plants resume operation earlier than in the past. Rayon yarn mills have much shorter holiday this year. Take Zhejiang and Jiangsu-based spinners for example, most of them gradually resume operation after the 10th day of the first lunar month calendar and thoroughly restart production after the Lantern Festival. However, the spinners generally came back on stream before the 10th day and are expected to completely restart production before the Lantern Festival.

2. Fewer stocks are piled up in VSF plants. In past years, spinners will suspend operation when VSF plants are running continuously during the Chinese Lunar New Year holiday, so more stocks will be piled up in VSF plants after the holiday and the accumulation of inventory can just assure downstream consumption in the peak season of Mar. In 2021, the country has encouraged people to stay put over the holiday to reduce the risk of infections. According to initial statistics, the increment of VSF inventory has been no more than 5 days since the market opens after the Lunar New Year. Compared with the growth of over 10 days in previous years, there may be insufficient stocks in the coming peak season.

3. VSF operating rate is restrained. VSF plants can be generally profitable at present, but they are unable to further raise operating rate due to short pulp supply. Coupled with reduced supply by some pulp mills, VSF companies may even cut production due to feedstock shortage in Mar.

The restart of spinners in advance, restriction of VSF operating rate and fewer stockpiles of VSF is likely to cause short supply of VSF in the coming Mar.