The report is mainly divided into three parts, covering VSF market review, analysis and outlook.

Part I: VSF Market Review. This section provides an overview of industry scale, capacity utilization, operations, profitability, and pricing. China's VSF capacity has declined slightly over the past five years with no new additions, yet strong downstream demand pushed 2024 operating rates to nearly 90%-a record high. Cash flows were mostly positive throughout 2024, with the annual average price reaching 13,386 yuan/mt, up 397 yuan/mt year-on-year. Downstream expansion continues, particularly in vortex spinning, which is growing at ~20% annually. As of April 2025, China's VSF capacity stands at approximately 4.86 million tons. Inventory levels started low in 2025 but rose later, remaining at a historically mid-to-low range. 

Part II: Market analysis. This section explores two key questions: Why is fiber consumption growing, and why is the market structure evolving as it is? According to Mr. Ding, capacity expansion in textile mills is driven more by cost advantages than demand growth-especially in vortex spinning, which offers superior cost efficiency. The development of lyocell is examined from a lifecycle perspective, with domestic production transitioning from its initial to growth phase. The section also outlines challenges facing the industry, including structural shifts and competitive dynamics. 

Part III: Market outlook. Focusing on economic projections, consumption trends, and domestic vs. export demand, this section draws from CCFGroup's models, which forecast fiber consumption to grow at an average of ~2% annually over the next five years. In retail, 2024 apparel sales saw little growth, while Q1 2025 recorded a 3.4% increase, though this momentum may not be sustained-full-year growth is projected at just 0.2%. Ongoing U.S.–China trade tensions and global recession fears may further dampen apparel exports in 2025, pushing more volume to the domestic market. Coupled with the shift toward online retail, offline channels face intensifying competition and margin pressure. 

Mr. Ding also highlighted key market observations and forecasted trends. Positioned comfortably in the value chain, VSF benefits from stable raw material supply and limited direct exposure to export risks. In fact, supply chain realignment may offer new export opportunities. While domestic demand faces headwinds, downstream capacity growth limits downside in fiber consum