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Insight | Time: Apr 17 2020 11:24AM
Drastic demand for mask ear strap drives crazy nylon DTY market
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A hot product appeared in recent gloomy nylon textile filament market- semi-dull nylon 6 DTY 140D/48F (i.e. double-strand nylon 6 DTY 70D/24F). This specification is one of the most regular products of nylon filament. The prices surged up greatly and supply was in extreme tightness. All that was because of the crazy demand for masks, or more specifically, mask ear strap.

1. Why are mask ear straps suddenly so hot?
Due to the great outbreak of the coronavirus pandemic in China since February 2020 and the wide spread in countries and regions outside China since March, the global demand for masks has increased significantly.

China local mask production capacity continued expanding ever since. Masks seemed to have become the "hard currency" in 2020, and the substantial expansion of the production capacity had also driven a wave of surges in relevant raw materials, such as melt-blown fabrics, non-woven fabrics, and ear straps, which have led to sharp prices in PP, polyester staple fiber, and spandex 140D market.

As the main raw material for ear straps, the demand for nylon DTY also surged in recent days. Since production capacity of masks and mask ear straps gradually increased since the Spring Festival (Jan 18-31 2020), demand for nylon 6 DTY products was growing steadily, and price rise was moderate.

But suddenly in mid-Apr, the demand soared up by at least 4-5 times in the week Apr 13-17, compared with last week (Apr 6-10). In addition to the normal capacity expansion, there is speculation.

2. What are the related nylon products used in mask ear straps?
The nylon filaments used for the ear strap are DTY140D (70D double strand), and nylon/spandex covered yarn 70D/70D. Since DTY140D is basically out of stock now, some ear strap factories started to replace DTY 140D with similar specifications, such as 100D, 200D, 80D, etc., which had wiped out the inventory of many DTY plants.

Prices of DTY140D had risen from 14,300-14,500yuan/mt to 16,500yuan/mt by Apr 15, the real transaction has risen more than 2,000yuan/mt, and prices of manufacturers out of stock had increased to 17,500-18,000yuan/mt or even higher. Driven by this, prices of semi-dull POY93dtex/24F, POY85dtex/24F also increased by 1,500-2,000yuan/mt, and other nylon filament products had lifted by 300-500yuan/mt.

3. What is actual the supply and demand situation?
Supply: As of Apr 15, according to the statistics surveyed by CCFGroup, the national daily production of nylon 6 DTY140D (70D double-strand) had exceeded 1,000tons, and this figure continued rising as some manufacturers were still adjusting their equipments. The production was expected to increase to around 1,200-1,400tons/day in the near future. Some small-sized DTY and POY plants in Jiangsu and Zhejiang were mostly producing this specification. The large and medium-large-sized manufacturers in Zhejiang and Fujian could produce 15-25tons/day to 60-70 tons/day, and many had raised the production from 30tons/day to 40-45tons/day.

Demand: The official announcement in early March that the daily production capacity of masks had reached 110 million (of which the daily production capacity of N95 is 2 million), and the figure has not yet been updated after. At present, there are more than 47,000 mask manufacturers, so it is more difficult to get the complete statistics. Here, we take the daily output of 400 million masks as a reference.

Nylon 6 DTY 140D is partly used to make flat ear straps of N95 masks, and partly used for round ear straps of disposable masks. The demand for DTY of these two kinds of ear straps is quite different, as demand from N95 mask is much higher. The current situation is roughly classified as follows:

Types of mask ear straps Mask production using 1kg DTY140D DTY consumption of 400 million masks
Round ear straps of disposable masks Flat ear straps of N95 masks 1300-3300 130-300 tons

The above figure is mainly based on the calculation of the consumption of 400 million masks per day for the consumption of nylon DTY140D.
It should be noted that:

(1) At the beginning of March, official data showed that the daily output of N95 masks accounted for about 2% of the total mask output. Although there has been capacity expansion in the past month, changes in the proportion are expected to be limited. Therefore, the DTY consumption estimated by N95 masks is not suitable as the main reference for the actual demand of nylon DTY.

(2) There are no updated authoritative statistics on the daily output of masks. The actual daily output may have exceeded 1 billion.

(3) Not all mask ear straps are produced from nylon DTY, but also polyester, but it is more comfort using nylon. Actual consumption is depending on mask manufacturers.

Risk warning: In summary, the diversity of ear strap materials is not considered for the time being, the current daily output of DTY140D (1000 tons) can be used to make about 3 billion disposable masks, and the buyer has recently stocked up nylon DTY other than 140D in large quantities. Therefore, the actual stock of DTY in the market has been seriously in surplus for the actual consumption of mask production. Even considering the recent concentrated expansion of ear strap machines, it is impossible to drive such a huge demand.

At the moment, the supply of nylon DTY140D is in short, but the daily output is still increasing. Even if the current procurement demand is maintained, it is expected that the supply will be soon sufficient. In other areas, terminal demand is still sluggish. Insiders are suggested to be alert to a sudden reduction in consumption after this wave of hot demand for ear straps, when price could drop as fast as how it has increased.
[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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