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Insight | Time: Sep 23 2022 3:42PM  Editor:Irma/Zhang
Sudden decline in CPL spot before Risun starts up
 
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After the middle of September, that is, in the week starting Sep 19, CPL RMB spot price suddenly fell rapidly continuously from last 12,600-12,700yuan/mt last week to 12,000yuan/mt in just 3 working days. Such a rapid decline is out of the expectations of both upstream and downstream.



2022-09-16 2022-09-21 Change Change rate
Benzene 7760 7850 90 1.2%
CPL 12600 12000 -600 -4.8%
Nylon 6 CS chip 13350 13150 -200 -1.5%

QQ鍥剧墖20220923154632.png


The core factor is still attributed to the commissioning plan of Risun's phase II plant in Cangzhou, Hebei. The new CPL plant of Risun Hebei is designed with a single set of 300,000 tons capacity, and equipped with coal gasification, ammonia, hydrogen peroxide and production of other major raw and auxiliary materials, and its startup will strengthen the cost competitiveness of the original phase I in Cangzhou.

 

Added with 300kt/year capacity in Heze Shandong (Dongming Risun), Risun Group鈥檚 total CPL capacity is rising to 750kt/year, becoming the largest Chinese CPL producer. As its upstream cyclohexanone plant has been started up, the new CPL plant is expected to yield product this week. Out of concern about the impact of new capacity, the overall mood of CPL and nylon 6 market is pessimistic.

 

Another reason for this round of decline is intensive presales of CPL suppliers before the National Day holiday (Oct 1-7, 2022). In fact, for the time being, CPL suppliers' inventory is relatively limited, and there is no similar burden like in June and July. But the general idea of the sellers is to take orders before the National Day holiday in order to avoid the accumulation of stocks after the holiday. But the combination of weak demand, new capacity starting up, and restart plans of other producers including Juhua and Eversun, has made the sellers' behavior very consistent, to sell stocks in advances. This urgent selling behavior causes a rapid decline in CPL prices.

 

In fact, pre-holiday stocking is also a necessary choice for downstream polymer plants. A part of the downstream buyers have expected the price to fall somewhat and then replenish moderately from the lower rates. But since CPL spot has been staying relatively firm in the week of (Sep 12-16) when buyers bargained evidently, while it suddenly fell by 600yuan/mt in 3 trading days, buyers are also too puzzled to purchase. Buyers who originally prepare to restock have retreated to sidelines instead.

 

Given the actual supply and demand pattern of CPL, it is still recommended for polymer plants to restock appropriately at low levels, and there is no need to be overly pessimistic.


[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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