Why cotton linter prices jump after the Spring Festival?

Cotton linter prices increase much recently, which have gained ground by more than 500yuan/mt after the Spring Festival.

Cottonseed market trades have recovered somehow after the holiday. Prices are stable to stronger and generally stay at high level. Now the price of Xinjiang-origin cottonseed is around 2,520-2,600yuan/mt and that of Shandong and Hebei-origin one is at 3,020-3,100yuan/mt. Under the backdrop of loose monetary policy, there are sufficient liquidities in the market and commodities keep going up, so cotton linter market is covered with bullish sentiment. A few cottonseed oil plants in Shandong, Hebei and Xinjiang already resumed operation during Feb 17-19 and producers are eager to quote firmly with prices rising fast recently. Now cotton linter for industry and food-grade refined cotton has risen to 4,500yuan/mt and 4,800yuan/mt respectively.

VSF price hit by the COVID-19 dropped to 8,200yuan/mt from the end of Jul to the beginning of Aug last year, but it gradually improved subsequently with the entrance of speculative funds and demand recovery, which has risen to around 15,500yuan/mt at present. Now the operating rate of VSF industry has advanced to 83% and dissolving wood pulp supply continues to be tight. The selling idea of Chinese dissolving pulp has went up to 8,000yuan/mt and the latest offer of imported pulp has gained by $155/mt to $1,050/mt. Dissolving pulp has been partially substituted by cotton linter pulp due to continued rising price and some plants also resume cotton linter pulp production recently, so increasing demand has pushed up cotton linter price. Moreover, the price may still keep firm and be easier to rise than to decline in the short term when the supply remains tight.