VFY price keeps rising to hit a 5-year record high

VFY price of China has been rising for almost one year since the third quarter of 2021, which is mainly driven by raw materials and export orders. There is even assistance from falling output in the second quarter of 2022, coupled with notable destocking. Now the mainstream price of bright VFY 120D is at 40,000-44,000yuan/mt, which is rarely seen in the past five years.

Pulp and chemicals perform similarly with VSF and no big changes are expected to occur in the short term. The export of VFY mainly depends on large quantity of procurement from India.

The monthly VFY export of China has been almost above 7kt since Jul 2021, and the acceptance of VFY price by downstream sector has improved much. At present, the export price of VFY for the same is higher than the same specification in China local market.

The export of Jan-Apr has increased by 7% year on year. There is the strongest purchasing power from India, Pakistan and Turkey. Among them, the export to India has grown by 38%, up 10 percentage points compared with Jan-Apr of 2021. Turkey witnesses a year-on-year growth of 82%, while there is a reduction of 27% for Pakistan. In other markets, the export to South Korea, Singapore and Bangladesh decreases by 40%, 42% and 49% respectively, while that to Italy increases by 45%.

The export orders are still worth expecting with the resumption of work and life outside China. Coupled with strong performance of raw materials in the short run, VFY companies are not under big inventory burden now.