Will uptrend sustain in VFY market in Q4 2021?

VFY prices saw drastic fluctuation in 2021. In the first quarter, the price rose by around 1,000yuan/mt driven by the vaccines and stronger textiles amid the expectation for economic and demand recovery. However, a new wave of the COVID-19 abroad led to sharp decline of demand in the second quarter, so VFY market kept weakening. In the third quarter, due to more production cut and stronger performance of other products spurred by soaring raw materials and energy as well as pressure of suffering losses, VFY companies raised offers again.

Overseas demand continued to be strong in the first quarter, while the demand in China local market did recover to pre-epidemic level. In the second quarter, a new wave of the COVID-19 emerged abroad and it was the traditional slack season in China local market, leading to sharp decline of demand. In the third quarter, China VFY market kept weak affected by production limitation, logistics and order cycle changes, while improving exports became the main support and the export volume of 2021 is likely to surpass the pre-pandemic level.

VFY price triggered by external environment and cost may increase further in the fourth quarter of 2021. The contradiction between VFY supply and demand in 2021 is expected to sustain. Huge stockpiles will weigh on market situation, capital and attitude of VFY companies who are under the pressure of having losses.