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Insight | Time: Aug 30 2021 4:04PM
Can VFY price increase sustain?
 
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VFY market has witnessed big changes this year. The price rose by around 1,000yuan/mt in the first quarter when the market was driven by stronger textiles owing to bullish news of vaccines as well as the expectation of improving economy and better demand. However, the resurgence of the COVID-19 cases in major consumption markets abroad in the second quarter caused sharp decline of VFY price. VFY price kept falling, while pulp and chemicals were relatively stronger, so VFY companies were under the pressure of suffering losses.


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VFY companies started to raise offers since Jul. The operating rate dropped to around 70% as the production and transportation of Henan was affected by the heavy rain. Orders warmed up both at home and abroad and market expectation was triggered by rising prices of other textile raw materials, so VFY plants gradually raised offers by 1,000yuan/mt. Later, the offers were further adjusted up by 2,000yuan/mt since the producers were eager to get rid of the losses.

 

VFY is the product that highly depends on export. VFY export of China in 2020 was affected by the COVID 19, especially that in the second quarter when the volume dropped to low level. In the first seven months of 2020, VFY export of China totaled 26.677kt, which was 48.701kt in the same period of 2021, up 82.6% year on year.


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VFY plants still curbed production, while traders and downstream plants were less active in restocking and the implementation of new offers was slow. Moreover, sales in overseas market have also slowed down, so the increase of VFY price may be slower.

[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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