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Insight | Time: May 22 2017 10:05AM
Would nylon 6 filament demand rebound again?
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Nylon 6 textile filament market had not stabilized till mid-May after the market slumped by 7,000-8,000yuan/mt in Mar and Apr, and present prices were close to prices before the surging market in Nov, 2016. There were also changes on nylon 6 filament demand.

Demand decreased moderately.

Nylon 6 filament market stayed bearish in mid-May, and nylon 6 filament demand reduced somewhat till mid-May from Apr. On one hand, nylon 6 filament market entered into slack season in May, and nylon 6 filament demand declined. Demand was expected to stay weak till Jul. On the other hand, CPL market rebounded from end-Mar to mid-Apr, so nylon 6 chip market and nylon 6 textile filament market held steady. Downstream plants purchased in a better sentiment, and textile filament demand rebounded evidently. But CPL and nylon 6 chip market fell from late-Apr to mid-May, so downstream plants purchased for rigid demand in a flat sentiment.

For inventory and operation rates, most filament plants reduced operation rates and shut down units for short periods in end-Mar due to falling market. Owing to good demand, filament plants raised operation rates mainly in Jiangsu and Zhejiang in Apr, so the overall operation rate rose. Large plants in Fujian indicated that they would lower operation rates in May because of decreasing demand and orders. Product inventory of most filament plants had reduced to a low level, and inventory of a small number of filament plants was at 30 days or above. As a whole, filament plants extended to produce on demand, and filament plants were expected to handle the falling market and weak demand well with low product and feedstock inventory.

Would textile filament demand rebound amid stabilizing feedstock market?

Some deals were done at 11,200yuan/mt. Besides, nylon 6 CS chip market increased as downstream engineering plastic plants and traders purchased at bottom prices, and chip plants lifted offers. Crude oil market rose largely as OPEC tended to prolong the deadline of production reduction. Meanwhile, benzene market was also firm supported by downstream styrene market. Therefore, CPL market was likely to rebound again.

Textile filament demand rose evidently as feedstock market rebounded in early and mid Apr, then would demand rebound again with stabilizing feedstock market at present? On one hand, demand was weak in slack season, and filament stocks of downstream weaving plants had been at a low level, so demand was likely to rebound again supported by stabilizing feedstock market. On the other hand, purchase sentiment of downstream plants had been affected by surging and slumping market, and coupled with slack season, downstream demand was less likely to rebound.

As a whole, CPL market was expected to rebound again if Sinopec did not lower the nomination for CPL, and nylon 6 filament demand was likely to increase amid rising feedstock market.
[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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