August Viscose Feedstock Market Report

Cotton linter

I Market Review

Aug is a traditional transition period of old and new cotton linter. Goods remaining on the market were rather tight but the price was pushed up driven by demand from refined cotton. High‐quality cotton linter had been favored by customers due to short availability. In Shandong, the price stayed at 8500yuan/mt early this month, but the higher traded price was pegged at 9000yuan/mt by end Aug. Ordinary cotton linter was mainly changed hands on small quantity. The prevailing price was stable despite of mixed performance in some regions. The price in east China maintained at 7300‐7800yuan/mt and that in central China was pegged at 7000yuan/mt. The supply in Xinjiang was limited this month and sporadic deals were concluded at 6500‐7000yuan/mt.

II Import
Cotton linter imports of China totaled 11.858kt in Jul 2010, down 21.97% from Jun and 54.09% year on year. The decrease in import volume was attributed to the end of 2009/10 cotton season, overseas supply also started to reduce. The major origins were central Asia, US and India, but the volume from other regions decreased apparently.

Jul import price lost $60/mt and fell to $765/mt. Apart from US cargoes rising to $746/mt, other countries generally saw price decline. Syrian goods averaged at $596/mt, down $368/mt.

Cotton Linter Imports of Chinain Jul 2010

III Outlook
Nearly no old linters are available on the market in Sep and new arrivals of new cotton linter are not expected in short run, so the market may be quiet next month. Prices of sporadic new linters will be mainly steady.

Pulp

I Market Review

Cotton linter pulp market presented dull in Aug, but it gradually turned to be strong with improving VSF market at the end of month. The industry meeting in end Jul fixed guide price for staple‐grade cotton pulp at 12500‐12800yuan/mt, but no takers appeared in view of fast VSF price decline, so some pulp plants lowered their selling ideas to 12000yuan/mt or even lower. Subsequently, VSF price rebounded after the coordination of industry union, so cotton linter pulp suppliers became reluctant sellers. By the end of month, traded price had reached 12500yuan/mt, with the higher quotation at 13000yuan/mt. In Xinjiang, the selling idea generally stayed at below 12000yuan/mt, but suppliers were reluctant to sell at 12000yuan/mt.

As for dissolving pulp, Swedish goods had been sold out but Brazilian pulp was quoted firmly at $1600‐1650/mt, which led to stalemate on the market. Later, VSF industry union released guide price for procuring dissolving pulp at $1500/mt, but many deals were concluded at higher level due to firm attitude of suppliers, short availability on the market and low feedstock inventory of some VSF plants. As for filament‐grade dissolving pulp, Canadian goods were traded higher at $1640/mt and products of some small‐sized plants were changed hands at $1560/mt. China‐origin dissolving pulp was offered at 11000yuan/mt but news from downstream sector reflected that the lower selling rate got close to 10000yuan/mt. By the end of month, Fujian Nanping Paper picked up the offer to 11500yuan/mt on trial basis.

II Import
China Customs data showed that dissolving pulp imports of China totaled 87.969kt in Jul 2010, up 14.61% from the previous month but down 16.67% year on year. The import price averaged at $1464/mt, up $15/mt from Jun.

CCF analyzed that apart from pulp for acetate fiber and other use, 77.6kt of dissolving pulp was used for viscose fiber, representing an increase of 15.8% from the previous month but year‐on‐year decline of 18.84%.

Dissolving Pulp Imports of Chinain Jul 2010 b yOrigin

Source: China Customs Data (revised by CCFGroup)

III Outlook
Apart from Xinjiang, cotton linter pulp plants in other regions of China still run with low operating rates. Coupled with high cotton linter price, cotton linter pulp rate is expected to trend up in Sep. VSF industry union already fixed guide price for procuring cotton pulp at 12500yuan/mt, so Sep price will be no lower than that level. However, traded price will depend on the negotiation between upstream and downstream plants.

On dissolving pulp market, goods are mainly held by a few major suppliers and downstream plants are preparing for replenishing stocks, so sellers have firmer attitude now. VSF plants try to talk down dissolving pulp price, but in consideration of brisk demand, deals will be concluded at high level.