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Insight | Time: Feb 11 2020 3:28PM
Impacts of the epidemic on the production of nylon filament plants
 
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Company Operating rate during the holiday Current operating rate (Feb 6) Region
Jinjiang 60% 50-60% Changle, Fujian
Hengshen 65% 60-65% Changle, Fujian
Huading 50% 45-50% Yiwu, Zhejiang
Meida 85% 70% Jiangmen, Guangdong
Mesbon 0% 0% Xiaoshan, Zhejiang
Xinkai 50% 40-50% Yuyao, Zhejiang
Kaibang 100% 90-100% Changle, Fujian
Xinsen 70% 70% Sanming, Fujian
Wanhong 50% 40-50% Changle, Fujian
Jinsheng 40% 40% Xiaoshan, Zhejiang
Wenfeng 0% 0% Nantong, Jiangsu
Jinchen 95% 70% Lianjiang, Fujian
Yongchang 50% 40-50% Xiaoshan, Zhejiang
Donglun 0% 0% Fujian, Xiamen
Yatai 0% 0% Suzhou, Jiangsu
Yaxing 40% 30-40% Jinhua, Zhejiang
Yinan 0% 0% Huzhou, Zhejiang
Hengjie 95% 70% Lianjiang, Fujian
Tangyuan 90% 90% Changle, Fujian
Derun 100% 100% Zhuji, Zhejiang
Dingzhi 50% 50% Suzhou, Jiangsu
Deshipu 0% 0% Yiwu, Zhejiang
Jinqi 0% 0% Zhuji, Zhejiang
Xinfu 50% 50% Xiaoshan, Zhejiang
Hongtu 50% 50% Xiaoshan, Zhejiang
Other 3% 3%  
Average 39% 36%  

Logistics:
Poor logistics has caused some manufacturers to fail to get in raw materials or deliver finished products. At present, there is only a small amount of logistics in Fujian and Guangdong, which requires delivery once of an entire vehicle. Jiangsu and Zhejiang are dominated by a small amount of logistics within the province, which is difficult to transport vas other provinces. It is difficult to circulate goods between Fujian, Guangdong and Jiangsu still.
Inventory rises fast:
Due to the impact of logistics and the epidemic situation, it is difficult to resume downstream operation, and nylon filament yarn inventory is difficult to be digested after the Spring Festival, especially the high-operating-rate filament plants, whose inventory has risen rapidly, compared with the rate before the Spring Festival up about 10 days.

Financial pressure:
Due to the large stock of raw materials in the NFY plants before the Spring Festival, NFY inventory is hard to be transformed into cash after the festival. The large amount of capital occupied, uncertain logistics and downstream production resuming time, and some NFY plants have experienced tight capital flow already.

Insufficient auxiliaries:
Poor logistics and delayed production of auxiliary materials factories have resulted in tight supply of auxiliary materials such as paper tubes, cartons, pallets, and oil agents in some NFY factories. Some NFY factories only stock goods until Feb 8th-13th, and only a small number of plants have until Feb 22 (the end of the first month according to Chinese Lunar calendar).

Labor:
plants in Zhuji and Shaoxing (Zhejiang), and some enterprises in Shengze (Jiangsu) are required to resume work no earlier than Feb 17th. Most plants in Fujian, Guangdong, Jiangsu and Zhejiang have temporarily requested that work be resumed no earlier than Feb 10th, although many have been delayed from this date. However, for returnees from other provinces, more than 14 days of quarantine are required before they can start work. For NFY plants, higher risks and higher management costs are all obstructing them from recovering production in short. Therefore, labor force in NFY plants is hard to increase in short.

Outlook:
Affected by the epidemic, it is difficult to resume production in the downstream, the inventory in the middle and upper sectors is rising rapidly. The contradiction between supply and demand is obvious. NFY plants mostly have pessimistic outlook toward February and March. They see no point to build feedstock inventory at the current price rate.
[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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