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Insight | Time:Jan 23 2018 10:43AM
NFY plants raise prices amid rising contract chip prices
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Last week, it was heard that Sinopec would lift the Jan settlement for CPL, so some nylon 6 HS chip and textile filament plants raised prices. Coupled with downstream replenishment for textile filament before Spring Festival, inventory of filament plants decreased, and sources became tight. Some filament plants still hold stable prices at present, but if Sinopec lifts the settlement as expected, those filament plants would also raise prices.

This round of rising nylon 6 textile filament prices resulted from replenishment of downstream plants and especially from increasing chip prices. Sinopec’s Dec settlement for CPL was at 16,250yuan/mt, which was lower than spot prices at 16,600yuan/mt. Besides, high-grade CPL supply turned short as several mainstream CPL plants were running unstably, and Sinopec was expected to raise Jan settlement for CPL. In addition, most contract deals for chips were concluded at 2018 new contract prices in Jan. 2017 contract chip prices were at 1,700-1,800yuan/mt plus Sinopec’s settlement for CPL, while 2018 contract prices rose to 2,000-2,200yuan/mt plus Sinopec’s settlement, up by 300yuan/mt. Thus, cost of filament plants increased. However, profits of nylon 6 textile filament plants had shrunk to around break-even line amid weakening end-user demand previously. Higher chip prices weighed on filament plants, so textile filament plants raised prices.

For downstream replenishment before Spring Festival, downstream plants would end up restocking as it is close to Spring Festival, and downstream weaving plants would reduce or stop production intensively in end-Jan and early-Feb. Besides, most filament plants have carried out trading by cash in 2017, but downstream weaving plants are under capital pressure, restricting their purchases for textile filament.

As a whole, textile filament plants would remain steadily higher supported by firm chip prices, but end-user plants would end up restocking textile filament, so transactions would lessen, and filament prices would stabilize gradually. Most mainstream textile filament plants tend to keep running at high rates during Spring Festival, so filament inventory would accumulated moderately, but if downstream demand recovers after Spring Festival normally, textile filament sources would be short, and filament prices would be firm.

*Note: HS- high-speed spinning
   CS- conventional spinning
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