VFY market could maintain the stability in 2024?

VFY prices have stabilized since the end of first quarter as the prevailing price of bright VFY 120D has been around 41,150yuan/mt. Downstream buyers were talking down the prices around the Spring Festival, but VFY producers announced price increase to stabilize the expectation. The inventory also dropped to a historically lower level of less than 50 days when sales continued to perform well, boosting the market mentality.

In the second quarter, buyers became more sensitive to the price, leading to slower sales, but VFY plants were still eager to keep price stability, and due to improving demand in overseas market in the third quarter, the pressure of VFY producers was alleviated and prices continued to hold steady.

VFY market is expected to keep stable operation in the fourth quarter, and the demand both at home and abroad may be largely steady, so there will be higher production activity in 2024 and the operating rate may remain high. In addition, some new lines may be put into operation.

As for exports, the processing and application of VFY is developing well outside China, and China is the most important supplier of VFY. However, the negative impact of economic situation on end-user consumption cannot be ignored. According to customs data, VFY export of China totaled 67.6kt in the first three quarters of 2023, a year-on-year decline of 15%. During the same period, the average monthly export volume was 7.5kt, which was 8.8kt in the same period of last year. In Sep this year, the export volume resumed to 10.9kt, but whether the uptrend could sustain needs further observation by considering consumption downgrade caused by the global economic situation.

In 2024, the price of VFY is anticipated to be stable, in spite of narrow fluctuations. The start-up of new capacities is noteworthy, but based on the progress of construction, the impact may be limited during the year, so VFY market is likely to maintain a stable trend with acceptable pressure.