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Insight | Time: Mar 19 2018 2:55PM
Will postponed start-up of new capacities boost VSF market?
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New VSF capacities are expected to be released intensively in the first half of 2018, according to the schedule announced in the second half of 2017. However, the start-up of most facilities is postponed due to the influence of many factors. The actual increment in the first quarter is much lower than expected.

Company Capacity (kt/yr) Scheduled start-up time Status quo
Jilin Chemical Fiber 120 Oct, 2017 Largely running with normal operating rate
Xinjiang Tiantai 100 Dec, 2017 Closed without process of restart in the short run
Sateri (Jiujiang) (phase I) 80 End 2017 Start up in end Jan, but still under commissioning
Sateri (Jiujiang) (phase II) 80 Feb-Mar, 2018 Start-up date to be confirmed
Tangshan Sanyou 250 28-Mar Delayed till end May
Alaer Fulida 200 Jan, 2018 Not likely to start up in H1, 2018
Funing Aoyang 160 May, 2018 Likely to be postponed till H2, 2018
Jiangsu Xiangsheng 270   Closed 
Xinjiang Tiantai 60   Closed 
Jiujiang Hengsheng 25   Closed 
Manasi Aoyang 30   Unable to restart
Dandong Wuxing 40   Officially washed out
Zhejiang Fulida 180   Maintain all lines during Jan 20-Feb 23

Besides delayed start-up of new lines, some facilities are shut down or washed out, so VSF operating rate in Jan-Feb declined on yearly basis as well as output.

Feedstock cost has hiked in the meantime. Caustic soda has gained almost 1,000yuan/mt and risen above 3,750yuan/mt currently, which was just above 2,800yuan/mt at the end of 2017. Dissolving pulp as major raw material also witnesses minor increase. The lower price of hardwood pulp was around $920/mt at the end of 2017, but the quotation was around $960/mt in Mar. Chinese dissolving pulp has also been quoted up by 200yuan/mt, though traded price needs further confirmation.

VSF market generally keeps firm after Chinese Lunar New Year holiday on lower operating rate and rising cost. Moreover, the second round of nationwide environmental protection inspection in 2018 will exert pressure on VSF operating rate, so the market is propped up by supply.

VSF demand is affected by labor shortage after the holiday, but there are still uncertainties and the influence of supply may not change much.

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