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Insight | Time: Aug 20 2020 2:41PM
Shifts of nylon 6 demand distribution in H1 2020
 
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In 2020, affected by the global spread of the COVID-19 pandemic, demand in many fields has shrunk. But the actual CPL production in the first half of the year has increased by 1% year-on-year, and the supply of nylon 6 has not shrunk. How is the production of PA6 distributed in the first half of the year?




Note: In the above table, the supply of nylon 6 = the supply of CPL + the import of nylon 6 -the export of nylon 6. The change of CPL inventory has not been considered for the time being

Demand in nylon downstream sectors in H1 2020
Of all the various downstream fields of nylon, consumption of nylon films was the only one that grew significantly in the first half of 2020.
This was mainly driven by surging demand for convenient and fast food at the early stage of the pandemic around the world, which drove the demand for nylon film. Particularly in March and April, when the pandemic was spreading fast outside, nylon film exports surged. The output of nylon film grew 35% year-on-year, and the proportion of nylon distribution to film grew 3 percentage from 5% in 2019 to 8% in H1 2020.

As the major application field, consumption of nylon 6 textile filament had reduced in H1 2020. As the pandemic had severely affected civil consumption, textile filament output reduced evidently, especially in February-March, when China domestic market was almost paralyzed in order to control the pandemic spreading. But in April 2020, as demand for masks surged, downstream rushed to purchase nylon 6 DTY, applied to mask ear straps, in multiplied quantities. The output of nylon 6 textile filament reduced 5% year-on-year, and the proportion of nylon distribution to film dipped 2 percentage from 55% in 2019 to 53% in H1 2020. But without the demand for mask, nylon 6 textile filament output decrease would exceed 10% year-on-year.

Nylon 6 textile filament demand shrank due to falling China domestic textiles trading and exports in the first half of 2020. In China domestic market, shrunk demand for textiles could be told in evidently declined China Textile City turnover in the first 7 months in 2020.

1. Turnover in China Textile City drops evidently


The daily turnover of chemical fiber cloth in China Textile City from January to July was significantly worse than that of the same period last year, and this gap has been reduced till late July. However, the cumulative total trading volume from January to July has reduced by more than 35%.

2. Textiles export temporarily rise, apparel exports heavily drop


Apparel exports have been hit down heavily by the pandemic. China’s apparel exports have been dropping more than 20% in the first 5 months, though it has recovered somewhat in June, while the year-on-year gap is still more than 10%. The accumulative apparel exports in the first half of the year have decreased by 22.1% year-on-year.

However, the pandemic has also driven up some anti-epidemic related textiles such as masks and protective clothing. Textiles export jumped up evidently year-on-year in April-June, while this rising trend has been reducing after May. The accumulative textiles exports in the first half of the year have risen by 26.4% year-on-year.

Comprehensively speaking, actual demand for NFY driven by mask export is estimated at around 40-50kt, however, the demand decrease due to shrinking apparel exports is estimated at around 180-230kt. The temporary increase in textiles export could not make up the shortage brought by lower apparels trading.

In other areas, the output of industrial filament, engineering plastic, and microfiber was also restricted during February-March and in April-May both supply and demand recovered to a normal pace. Demand for staple fiber had shrunk similarly like nylon 6 textile filament, given the shrinking end user’s demand on the year.

In addition to the impact of demand in various areas, the supply of nylon 6 in the first half of the year was the same as that of the same period last year, as some imports were replaced by China domestic production and some cargoes were accumulated in the form of inventory (mainly high-speed spinning chip).

[RISK DISCLAIMER] All opinions, news, analysis, prices or other information contained on this report is provided by analyst of Zhejiang Huarui Information Consulting Co., Ltd (CCFGroup) as general market commentary and does not constitute investment advice. CCFGroup will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
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