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Insight | Time: Jul 31 2019 4:43PM
No big changes expected in VFY market in H2 2019
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VFY price was generally stable in the first half of 2019. The inventory decreased amid sales of stocks from idled lines and small increment of new capacity. In the meantime, demand was relatively steady, so VFY plants saw good sales with firm prices. The trading mood warmed up after Chinese Lunar New Year and VFY plants intended to raise offers, but there was no strong reaction on the market due to tax reduction policy, so the price was mainly stable. The range of price moved up slightly with the increase in the ratio of first- and second-grade VFY in the market. At the end of the second quarter, as the tepid sentiment in the off-season gradually became apparent, there were discounts regionally, but most suppliers kept prices stable and the overall impact was small.

The quantity of VFY companies has reduced while capacity is largely stable and most plants are expected to keep stable operation, so VFY output of China is expected to be around 179kt in 2019, but there's a trend toward fine denier VFY.

The overseas market has always been one of the main outlets of China's domestic VFY. Years of cumulation has brought mature application and steady demand, and the impact from trade war is limited according to the market performance in the first half year. In consideration of supply and trends of fine-denier products, VFY export of China is anticipated around 62kt in 2019.

In conclusion, VFY market is more likely to remain steady in 2019, as long as there's no obvious impact from macro economy. The price may soften in the third and fourth quarters or in the middle of the year, but may be stable to stronger in the second half year when demand picks up in peak season. The price may stabilize with the market slowing down toward the end of the year.
[RISK DISCLAIMER] All opinions, news, analysis, prices or other information contained on this report is provided by analyst of Zhejiang Huarui Information Consulting Co., Ltd (CCFGroup) as general market commentary and does not constitute investment advice. CCFGroup will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
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