Is VFY overseas market worth expecting?

In recent years, the processing and market applications related to VFY have developed well outside China, and China remains the primary supplier of VFY. However, the negative impact of the economic situation on the end-user consumption cannot be ignored. According to the export data in the first ten months of 2023, the continued outstanding overseas demand has slowed down somehow. The total export volume during the period under review is 75.167kt, posting a year-on-year decline of 13%. The capacity expansion will promote the enterprises to keep exploring the export market, but considering the consumption downgrade trend resulting from the global economic situation, whether the monthly export volume can recover to nearly 10kt needs further observation.

As of Oct this year, the export volume of VFY just exceeded 10kt in Sep, which was just 7.5kt in average in the first ten months of 2023, much lower than 8.6kt in the same period of last year.

At the same time, the export price in Oct also fell by $1.3/mt or 2.4% on the month and $439/mt or 7.3% on the year to $5,579/mt. From Jan to Oct this year, the export price averaged at $5,703/mt.

India and Pakistan are still the top two destinations of China's VFY export, accounting for 76% of total from Jan to Oct this year. The VFY exported to India was as high as $6,147/mt, while that to Pakistan was much lower at $4,690/mt during the same period. As for origins, Xinxiang Chemical Fiber, Jilin Chemical Fiber and Yibin Grace are the major exporters in China, taking up 93% of the total volume.

The demand in China local market has indeed recovered in the first three quarters of 2023, but overseas demand was less than expected earlier. Fortunately, it started to warm up in the third quarter. Considering the cyclical fluctuation in the stocking up and procurement by downstream sector, the overall demand will weaken somehow in the fourth quarter. The demand in China local demand is expected to relatively mediocre in 2024, which is mainly affected by the export orders of fabrics, while the direct export of VFY is still anticipated to recover.