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Insight | Time:Jan 10 2018 2:09PM
Will nylon 6 filament market rebound after stabilizing for long?
 
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End-user market of nylon industry has turned weak evidently since Nov. Feather yarn market which has been strong also weakens, and looms of jet spinning market are phased out due to environmental issue, with falling demand. With the expectation of a bearish market, market participants hold negative attitude towards the market. However, after small price drops in the first half of Nov, the market is largely stable.


CPL market mainly held steady in Nov. Luxi’s new CPL unit started up in early-Dec, so CPL offers decreased. But trading prices were mainly stable as some CPL units shut down and buyers purchased on demand stably, though Sinopec settled the Dec contract for CPL at a low price. For nylon 6 textile filament market, owing to weak end-user demand, inventory of textile filament plants accumulated gradually. Besides, spot prices for nylon 6 chips were higher than contract prices, so profits of textile filament plants shrank and reduced to the break-even line gradually. Textile filament plants with high inventory provided with more discounts. But in the whole month of Dec, inventory of filament plants did not rise evidently. For example, Huading and Jinjiang’s inventory was around two weeks. Supply of several plants was tight.


There is only one month left before Spring Festival, but downstream plants have not begun to restock textile filament. On one hand, calculated with current filament prices, downstream plants make low profits and they may even suffer losses. With the expectation of a bearish market, downstream plants are unwilling to restock textile filament. On the other hand, downstream plants which restocked filament previously suffered large losses during the slumping market at the beginning of 2017. So they are more cautiously at present and they prefer to keep low inventory. Textile filament stocks of downstream weaving plants were limited, while product inventory is high. Coupled with short capitals, they may not restock filament in short. In addition, downstream plants would stop or reduce production gradually after Jan 20 for Spring Festival holiday, and textile filament plants would also adjust operation rates accordingly.

As a whole, nylon 6 textile filament market may not fall evidently in short run. Current nylon 6 textile filament prices were relatively low. Buyers may purchase at bottom prices if prices decline to a low level. Besides, inventory of filament plants is still low, and if downstream plants restock some, sources would be tight. As a result, textile filament prices may tend to rise, but prices may not increases evidently. Players are suggested to focus on whether textile filament demand would rebounded before Spring Festival or after Spring Festival.
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