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Insight | Time: Jun 28 2017 2:58PM
Nylon 6 filament market to hold steady
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Nylon 6 filament market had rebounded since mid-May. Trading prices for CPL market rose from 10,800yuan/mt to 13,300yuan/mt, while price increase of nylon 6 filament market was smaller, and nylon 6 semi-dull FDY 70D/24F market was traded up from 17,000yuan/mt to 18,500yuan/mt. Nylon 6 CS chip prices began to dip from last week, and there were more sources at low prices. But CPL, nylon 6 HS chip and nylon 6 filament markets still held steady, despite the expectation of a weak market. Filament plants may not be under pressure even if feedstock market fluctuates later.

For fundamentals, filament plants mainly kept running at low rates. Production and sales of filament plants were good since mid-May, as downstream plants restocked at bottom prices and demand sustained good though it entered into slack season. Filament plant inventory continued falling to a low level, and the overall operation rate also lifted to a high level. Production and sales of filament plants dropped slightly in mid-late Jun, but production and sales of mainstream sources were still balanced, and some sources were still tight. Meanwhile, filament plants had accepted plenty of orders. Orders of mainstream sources in Zhejiang and Jiangsu and some sources in Fujian could be arranged for production till Jul, and some till early-Aug.

Downstream demand was still expected to be good despite weak end-users market. Firstly, downstream plants had restocked limitedly in peak season, and weaving plants still restocked less than previous years, though downstream demand had rebounded since mid-May. Secondly, some sources had started making samples for winter, and demand of covered-yarn market came ahead of time, though it was in slack season. Thirdly, environmental protection strengthened, and it was heard that weaving plants and printing and dyeing plants in Wujiang district in Suzhou would shut down, so some downstream plants restocked somewhat in panic.

For profits, filament plants broke even or only made slight profits as price increase of textile filament market was smaller than that of feedstock market. For example, mainstream trading prices for nylon 6 FDY 70D/24F market were at around 18,500yuan/mt, while mainstream trading prices for feedstock nylon 6 high-grade HS chip market were at 15,200yuan/mt, so processing cost was only at 3,300yuan/mt, which made it hard to cover increasing air-condition and medicine costs in summer. Thus, filament plants made slight profits in spite of good sales.

As a whole, filament plants have enough orders, and inventory is low, but profits are poor. If feedstock market falls, filament plants may reduce operation rates rather than lower prices. Besides, feedstock market may not be influenced by startups of new CPL plants in Jul, as it takes some time for new units to produce stably and restarts of plants may be delayed. Thus, nylon 6 filament market may hold steady in short, and players are suggested to focus on startups of new CPL units and restarts of plants that have shut down.

*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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