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Insight | Time: May 24 2017 10:17AM
CPL market rebounds supported by firm commodity market
 
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CPL market rebounded again last week. The lowest trading prices for liquid sources were at 10,800yuan/mt on around May 12. However, offers rose to around 11,800-12,000yuan/mt till May 23, and trading prices increased to 11,700yuan/mt, 6 months payment, delivered to E China. CPL market rose again supported by better fundamentals and increasing commodity market.

For fundamentals, CPL market continued falling in the first half of May, and trading prices dropped to 10,800-11,000yuan/mt, 6 months payment, delivered to E China. Sellers were unwilling to reduce prices further under cost pressure, and discussions were at a stalemate. But the market sentiment changed till May 14. Downstream plants especially nylon 6 bright chip plants held the view that CPL price drops would be small in short as benzene market stabilized, so they purchased some at 10,800yuan/mt, 6 months payment, delivered to E China. Sellers also sold moderately under sales pressure, and inventory pressure of most plants was eased.


Besides, the overall operation rate of CPL plants was low recently especially in North China. Sinopec Shijiazhuang, Risun and Yangquan Coal Industry shut down their units for maintenances. Besides, Nanjing Fibrant (former as DSM Nanjing) reduced the overall operation rate to 80%, and Juhua’s 100kt/year unit was running at 70%, with Lanhua Sci-Tech’s unit at 90%. Baling Petrochemical’s units had not restarted totally. Therefore, CPL supply especially spot supply reduced evidently.


CPL rebounded again also supported by commodity market. Commodity market was firm recently, and crude oil market continued rising. Besides, PTA, MEG, plastics markets had dropped largely previously. Therefore, chemical product market rebounded largely.


Benzene market went up supported by rising styrene market, and Sinopec also lifted nomination for benzene by 300yuan/mt to 6,300yuan/mt.

CPL market was not likely to go up largely with the present supply-demand structure. Nylon 6 CS chip plants sold well, but most restocked at bottom prices, and downstream staple fiber and engineering plastics demand did not increase evidently. Nylon 6 monofilament demand was better, but most was for semi-dull monofilament and the amount was small. For downstream markets of nylon 6 HS chip market, demand of nylon 6 FDY for jet spinning and for warp knitting was good, while DTY demand was poor. Dull HS chip supply was tight and demand was good, but the demand occupied only a small portion of the whole chip demand.

For Chinese domestic commodity market, the keynote was to de-leverage in 2017, and the market in 2017 was hard to be as bullish as that in 2016 with less funds. Crude oil market was still suppressed by shale oil cost.

Styrene and benzene markets went up mainly due to rising commodity and crude oil markets, but fundamentals were still not improved.

As a whole, CPL market is expected to increase further as crude oil and styrene markets may keep rising and Sinopec may lift nomination. But CPL market may not go up largely unless prices keep rising and downstream plants restock largely, and after surging and slumping market, prices are less likely to rise greatly.


*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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