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Insight | Time: Apr 21 2017 3:22PM
CPL market to rebound again in Apr and May
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CPL market slumped in Mar and reached the bottom line by end-Mar. From end-Mar to Tomb-sweeping Festival, buyers purchased nylon 6 CS chips at bottom prices, and RMB benzene market followed increases of USD benzene market. There were deals at 11,500-12,000yuan/mt in CPL market, and then CPL lifted offers again. Offers rose to over 13,000yuan/mt rapidly, and several up to 13,500yuan/mt. There were a number of deals at below 12,500yuan/mt, and downstream plants restocked at 12,600-12,800yuan/mt, with only a few deals done at 13,500yuan/mt. But it was hard for downstream plants to follow the rapid increases amid weak demand, so downstream plants purchased in a dull mood.

If prices rose slowly, CPL market would be in a better position.

On one hand, there would be enough time for downstream market to recover. Plants especially chip and textile filament plants had not run out of feedstock purchased at high prices and products with high costs. Inventory accumulated, and funds were occupied. Besides, market participants had not recovered from previous slumping market in mentality.

On the other hand, participants’ confidence for the market would recover. There was rigid demand from downstream plants, and demand of textile filament plants was supported by seasonal factors. Chip market especially nylon 6 HS chip market tended to stabilize evidently in mid-Apr. But in general, downstream plants restocked in a dull mood, as they had no confidence for the market, especially for CPL market. CPL market had stopped rising after rebounding from the bottom line.

However, nylon market still made slight profits calculated by purchasing and producing on demand till Apr 19, though the market was bearish.

Product Benzene CPL Nylon 6 HS chip Nylon 6 CS chip Nylon 6 POY 93Dtex/24F Nylon 6 FDY 70D/24F
Price 6450 12600 14600 14400 17300 18500

For inventory, chip and CPL plant inventory had been high previously, but plants destocked as nylon 6 HS chip plants reduced production and downstream demand recovered slowly, except several large plants. Nylon 6 CS chip plant inventory was controllable as there were some sales at bottom prices previously, though sentiment declined slightly in the market. CPL demand did not recover evidently, but inventory problem was eased as there were a number of turnaround plans of enterprises including Baling Petrochemical, Nanjing Fibrant(DSM Nanjing originally), Haili, Sanning, Risun, Tianchen and Fangming from Mar to the beginning of May.

As a whole, demand did not recover evidently. Fundamentals recovered somewhat but were still not stable. The market was influenced by slipping benzene market evidently. CPL market was expected to rise if plants destocked and benzene market went up.

*Note: HS- high-speed spinning
   CS- conventional spinning
[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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