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Insight | Time:Dec 20 2017 1:47PM
Analysis on current CPL market
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CPL market has stayed stable since late-Nov, and the expected bearish market does not come. The market is extremely quiet in Dec after great slips and rises in Nov, and here are the reasons.

Firstly, Nanjing Fibrant’s CPL units shut down accidentally in late-Nov. Nanjing Fibrant’s two CPL units with capacity of 200kt/year each shut down in turn as Nanjing Chemical’s synthesis ammonia plant shut down after the 19th National Congress. Then, due to hydrogen problem, both of the units shut down accidentally in late-Nov. Thus, high-grade CPL supply became tight, and several nylon 6 HS chip plants reduced production. Besides, some chip plants restocked spot CPL moderately, so spot supply also became partly tight in early-Dec.

Secondly, Luxi’s new CPL unit did not run stably. Luxi’s new unit started up in end-Nov, but it was not running stably. The unit yielded only a few products in early-Dec and the product quality was not stable. Thus, CPL supply was not evidently influenced by Luxi’s new unit.

Thirdly, demand turned weak. Sales ratio of both chip and textile filament plants reduced. But different plants acted differently. Some plants with high inventory sold with discounts; several plants reduced production; and a few plants with strong production and sales worried about short feedstock supply. Current inventory of chip plants was low at within 2 days, while that of textile filament plants increased slightly, which might affect the markets.

Present CPL market was similar with that in Jun 2017 when prices rose and then stabilized. The market stabilized in Jun due to the startup of Shenyuan’s new CPL unit, while at this time in Dec owing to the startup of Luxi’s new unit. Nearly all downstream plants kept purchasing on demand. CPL market began to rise as the startup of Shenyuan’s new unit was delayed in mid-year, but the present CPL market was expected to stay bearish in short.

First, demand was strong in mid-2017, while current textile filament demand remained weak in slack season. Second, CPL prices in mid-2017 were low at around 13,500yuan/mt, while present prices were high at 16,500yuan/mt. Third, CPL market had seen surges and slumps previously affected by Luxi’s radical price changes, so market participants became more cautious now. Thus, CPL market may be bearish.

Nanjing’s one CPL unit is expected to restart on Dec 20, but Juhua’s CPL unit would shut down on around Dec 20 for 20 days. Meanwhile, Yangquan’s CPL unit is slightly unstable as it shut down accidentally on Dec 18, and Luxi’s unit may not run stably before end-Dec. Besides, Shenyuan’s unit only runs at 80% due to rising prices for raw and auxiliary materials. As a whole, fundamentals are in a good condition, but buyers are still suggested to purchase cautiously.
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