VFY market ends the year with better performance

VFY prices saw no big fluctuations for most time of the year. There were sales promotions at the beginning of 2023, and sales kept stable subsequently without big pressure, with trading prices rising steadily. The sales volume was stimulated by price rise at the end of the year. By the end of December, the quotation of bright VFY 120D had risen to 41,700yuan/mt, hitting a nearly 10-year high.

VFY plants were running with steady operating rate of around 90% in 2023, which was the most stable level in the past few years. It was mainly because that there was better production activity with the stability of VFY sales and profits. At the same time, there was no influence of maintenance or unexpected factors. VFY sales slowed down during the slack season in the third quarter. Traders and downstream plants curbed the feedstock inventory, and the inventory of VFY plants accumulated to around two months. Later, with the improving export orders and better sales of some specifications of VFY products in China, the sales ratio had been over 100%, leading to further decline in the inventory. By the end of Dec, the inventory of VFY industry had fallen to around 50 days.

As for demand in overseas market, VFY export of China in the first eleven months of 2023 totaled 81.958kt, a year-on-year decrease of 12.45% from the comparable 2022 level of 93.611kt. The monthly average export volume dropped to 7,451 tons from 8,510 tons in the same period of last year. The major destinations of VFY were mainly stable this year, with the concentration improving further. The share of India kept increasing to 58% as China's largest VFY export destination.

VFY was strongly supported by domestic and overseas demand in 2023, with rising prices, maintained profits, and stable to better inventory level, laying a good foundation for 2024. However, attention should also be paid to the impact of the market after the release of new capacity by leading companies. If the demand fails to follow up, the supply-demand contradiction will expand, resulting in downward pressure.