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Insight | Time: Sep 30 2019 3:13PM
Is nylon 6 chip import decreasing generally under China's expansion?
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By the end of the third quarter of 2019, the total nylon 6 chip capacity in Chin has increased by 20.6% compared with the figure by the end of 2018, to 820,000tons/year. However, peak demand circle has passed, and consumption of nylon textile filament and staple fiber tumble in 2019, while that of engineering plastic and film only grow moderately, and the number is far outpaced by nylon 6 chip capacity expansion.

Over the past 9 months in 2019, China domestic nylon 6 chip players have been through numerous fierce competitions. What about nylon 6 chip imports? Is the volume contract generally as expected?

According to the Customs, China imported 23.92kt nylon 6 chip (H.S. code 39081012, including virgin and nylon 6 chip compound) in August 2019, down 29.61% from the same period of last year and down 19.57% from the previous month. In January-August 2019, the accumulated nylon 6 chip imports had reduced by 11.2%.

Viewing nylon 6 chip imports by origins, the reduction from Taiwan's imports was the most obvious, as the import volume from January to August decreased by 48.8% compared with the same period of last year. The proportion of imports from Taiwan fell from 42.2% to 21.4%, which was the most obvious among all importing countries and regions. Imports from Russia and South Korea also decreased slightly.

However, imports from Thailand, Saudi Arabia and Malaysia increased significantly, and imports from Vietnam, Belarus, and Germany increased slightly.

In contrast to the declining imports in the past two years, the amount of nylon 6 chip imported from Malaysia increased significantly. The proportion of Malaysian nylon 6 chips had risen from less than 1% in early 2018 to around 8% so far. It was mainly because that China enlarged imports of BASF’s modified products (compounds) in BASF in Malaysia.

The growth of nylon 6 chip imports was also obvious from Thailand, who had surpassed Russia and became the second largest source of nylon 6 chip imports, since China increased the imports of nylon 6 chip and modified products (compounds) from Ube Thailand.

Following Malaysia and Thailand, there was also notable growth from Saudi Arabia, though there was no obvious trend as the former two. In the second half of 2018, imports from Saudi Arabia expanded apparently, and the imports in 2019 basically waved around the average monthly imports in H2 2018. Actually, it was mainly Sumitomo’s compounding plant in China that imported nylon 6 chip from Saudi Arabia, and the shifting in the volumes verified a stabilizing supply from Sumitomo Saudi Arabia to the compounding plant in China.

As for the significant decrease in China’s imports from Taiwan, it was mainly due to the fact that there were huge volumes of new high-speed spinning chip productions started in Chinese mainland, while demand was not growing in line. So with much cheaper prices (also considering transportation fee, shipment term, etc.), nylon 6 chip produced in Chinese mainland had replaced that from Taiwan gradually.

Above all, the actual decrease in virgin nylon 6 chip imports in January-August was more than 11.2%, should the substantial increase of compounds was excluded. The decrease in virgin nylon 6 chip imports was estimated to be above 20%. And this trend would continue in the future, as new caprolactam plants start up and the cost of feedstock is compressed further.
[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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