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Insight | Time:Mar 6 2018 1:49PM
Nylon markets to inch up in March
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Nylon markets warmed up after Spring Festival holiday. But prices were high at present, and for price trend in Mar, demand-supply pattern would still be major influencing factor.

1. Some CPL plants shut down, and high-grade CPL sources remained tight.

Supply and demand was balanced before Spring Festival, and inventory of CPL, nylon 6 chip and nylon 6 filament plants all accumulated, but not high. During Spring Festival, the operation rate of CPL plants was nearly 90%, and that of nylon 6 chip plants nearly 80%. But nylon 6 textile filament plants only ran at 50%, nylon 6 industrial plants only at 60%, and end-user plants basically shut down for holiday. All nylon plants restocked before Spring Festival, so surplus CPL supply was converted into inventory of downstream plants.

CPL spot prices were at around 15,900-16,000yuan/mt after Spring Festival. But CPL plants of Risun, Shenyuan and Tianchen Yaolong shut down in recent days. Thus, spot CPL prices rose to 16,600-16,700yuan/mt, and Sinopec lifted the Mar nomination for CPL by 300yuan/mt to 17,100yuan/mt. Besides, nylon 6 HS chip prices rose by 600yuan/mt after Spring Festival holiday, and nylon 6 CS chip prices hiked by 1,000yuan/mt. Due to low operation rate of CPL plants and recovering operation rate of downstream plants, high-grade sources were tight. But profits were high, and as plants restarted, operation rate of CPL and nylon 6 chip plants would rebound to a high level.

2. End-user demand recovered slowly.

Some nylon 6 textile filament plants also raised prices slightly after Spring Festival, mainly in Fujian. In contrast with bullish upstream markets, some end-user plants had not started work. End-user demand was expected to recover after Mar 5 gradually.

Supported by fundamentals, nylon market may continue rising in short, but prices are high at present, and if prices increase rapidly, downstream plants may purchase less or even reduce operation rates. Then supply would lengthen, dragging CPL prices down. In conclusion, nylon markets may inch up stably in Mar, but if prices rise rapidly, prices may stop increasing in late-Mar. But if some accidental plant turnarounds occur, supply would become tight, and price increases may enlarge, but high prices may not maintain for a long time.

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