test


Member ID:
Password: 
Stay logged in for 30 days
Forget Your Password?
close

login CCFGroup App

Insight | Time:Jan 3 2018 3:13PM
CPL plants choose to trade for contract cargos
 
Text size
Many CPL plants have advocated contract orders instead of spot transactions since 2017. For example, Haili’s customers in Jiangsu, Zhejiang and Shandong have all signed contract orders except for several customers who stick to spot cargos. Haili’s settlement takes Sinopec’s settlement for reference, but freight is included, and there is a rebate of 200yuan/mt. Besides, the proportion of Risun and Lanhua Sci-Tech’s contract orders rises to 80% and over 70% respectively.

It is a trend for CPL plants to adopt contract transactions amid fierce competition. Contract transactions have prevailed in Zhejiang and Jiangsu where most are nylon 6 HS chip plants, and suppliers are mainly Hengyi, Nanjing Fibrant, Baling Petrochemical and Tianchen Yaolong who produce high-quality CPL.

Nylon 6 CS chip plants occupy a large proportion in Jiangsu and Hunan, and they have more choices of CPL products, so competition is fiercer in those areas, especially in Jiangsu where the proportion of nylon 6 CS chip and nylon 6 industrial plants is large. Spot CPL plants have struggled to expand their market in those areas. As a major CPL supplier for chip plants in Jiangsu, Haili also advocates contract orders. On one hand, sales would be more stable. On the other hand, Haili may expand its capacity further in long term, so it is not enough to sell spot cargos, and it is necessary to sell contract cargos. Other CPL plants also sign for contract orders, as price spread between contract and spot prices was small. 

For nylon 6 chip plants in areas excluding Zhejiang and Fujian, at first, they signed for contract orders as CPL plants insisted on contract orders and contract prices were also reasonable. Later, chip plants were worried that CPL supply would be tight amid rising demand for contract cargos. If CPL market increased, CPL plants would supply contract cargos first and then spot cargos, and spot sources would be tight. Thus, other chip plants also chose to purchase contract cargos.

As a whole, quantity and price are two major factors for contract transactions. CPL plants want to keep customers, and chip plants need enough CPL supply. If CPL and chip plants agree on a same price, a contract price would be reached. In this way, management and operation cost reduces, and the market would be more stable. But there is also pressure on CPL and chip plants.

Firstly, CPL plants should supply stably and product quality should be steady. But nearly all CPL plants would shut down accidentally for some periods of time in the year, which would lead to rising prices, tight sources and unstable quality.

Secondly, contract orders may be destroyed. Sellers or buyers may suffer losses when the market slumped or surged sharply, and the contract orders may be destroyed.

*Note: HS- high-speed spinning
   CS- conventional spinning
Related Articles
Sinopec settles the Jun contract for CPL
Nylon market morning express (Jun 22, 2018)
China nylon market snapshot (Jun 22, 2018)
AA & nylon 66 market daily (Jun 21, 2018)
Nylon 6 chip market daily (Jun 21, 2018)
Caprolactam market daily (Jun 21, 2018)
Nylon 6 filament yarn market daily (Jun 21, 2018)
CPL market influenced by nylon 6 CS chip market
Nylon market morning express (Jun 21, 2018)
Nylon 6 bright 1.5D staple fiber market moves down
 
Research
Brief analysis of annual reports of some listed companies ...
Nylon and polyester markets in reverse trend
 
 

浙公网安备 33010902000742号