Better profitability expected for VFY in 2024

VFY plants were running steadily during Jan-Jul of 2024. Jilin Chemical Fiber's 10kt/yr new capacity was fully put into operation, and the scale of other companies remained unchanged. The export market was generally stable, especially continued good sales of certified brands, though the unit price slipped somehow compared with the past two years. Chinese market was affected by the Spring Festival in the first quarter, with reducing production and raw materials consumption, but the rising quotations of VFY plants before the holiday and the bullish expectation for the post-holiday market triggered the demand for building up stocks by traders and weaving mills, so the overall procurement performed well. Supported by hotspots like jacquard and velvet, more orders were received by downstream sector in the second quarter. Moreover, the expanding capacity of some weaving machines had boosted the demand for fibers.

There is better performance of VFY price and profit, and the inventory burden of VFY companies is tolerable. Moreover, the demand both at home and abroad is expected to be largely stable, so VFY companies may show higher enthusiasm for production by running the units with high operating rates. Some popular varieties in downstream sector have boosted the demand for VFY, which are expected to digest the supply growth due to the launch of new units. The output of VFY in China is expected to further grow to 210kt in 2024.

Both supply and demand of VFY are expected to increase in 2024, weakening the negative influence brought by new capacities. The price is expected to be stable to stronger, and good profits are likely to maintain when feedstock costs are expected to be relatively stable.