Last year, India and Southeast Asian countries were affected by the epidemic, and textile orders flowed into China in large quantities. Now as the epidemic control in these regions and countries gradually shows results, the textile industry has also begun to recover. It is well known in the industry that a large number of overseas orders are flowing out to Southeast Asia. The misfire of the foreign trade market has also aggravated the hard days of the domestic textile market. The inventory of nylon civilian yarn has gradually increased slightly since 2021, and will continue to fluctuate at a high level in 2022.
The nylon industry suffered the most obvious decline in July, with nylon manufacturers lowering prices by about 1,000 yuan/ton. As of last Friday, the average domestic nylon POY (high-quality product; 86D/24F) quoted price was 17,350 yuan/ton, down 850 yuan/ton from July. The monthly decrease was 4.67%.
High cost and low demand for nylon yarn in the first half of the year
Inventory consumption has not accelerated
In the first half of 2022, the start-up in the downstream terminal field of nylon fluctuated at a low level, and the traditional textile peak season “Gold, Three and Silver” did not arrive as scheduled. Instead, affected by non-market factors, the start-up declined significantly, and the overall market was in a downward trend. Downstream weaving factories mostly determine production based on sales. From the survey of downstream start-up statistics, the average start-up rate of covered yarn and lace in the first half of 2022 is about 49% and 42%, down 10 percentage points and 9 percentage points respectively from the same period last year. Therefore, the downstream start-up rate will decline significantly in 2022, which will have a negative impact on the nylon market. It is difficult to achieve good support.
Since the second quarter, affected by external pressures such as repeated epidemics, demand in the downstream automotive and industrial plastics fields has declined. Other fields such as fishing nets, cord fabrics, and microfibers have also been weak. In addition, under the circumstances of high costs and low demand, downstream factories and traders have a bearish attitude towards the market outlook, and the pace of raw material procurement has slowed down. Sales of PA6 slicing are under pressure, and corporate inventories are increasing. The average inventory of PA6 conventional spun chips is about 15 days, and some companies have high inventory.
Although the overall market trend in the first half of the year showed an upward trend and cost support pressure increased, the overall profit level of the nylon industry declined compared with last year. The industry’s profit distribution is gradually moving closer to the slices, and the upstream raw material caprolactam has a larger profit loss. Judging from profits in the first half of 2022, the intermediate links in the industrial chain are more profitable. Upstream caprolactam has suffered losses. Although downstream nylon yarn has suffered losses, most manufacturers have maintained capital operations and hovered near the break-even line. The slicing market has turned a profit, and operating pressure is higher than in previous years. The profit distribution in the industrial chain is still uneven.
The market situation in the first half of the year continued into the second half of the year, and downstream orders were very deserted. They mainly consumed inventory, and actual transactions were very few. It is expected that nylon prices will fall all the way in July, surrounded by negative atmosphere, and nylon stocks continue to increase.
Raw material profit is upside down at 2,100 yuan/ton
Large-area parking and production cuts cannot stop the loss momentum, and the support of nylon is worrying
At present, the price of raw materials is not stable and there is no sign of rebound. The market outlook is even less optimistic for nylon. On July 25, Sinopec announced the settlement price of caprolactam in July. The settlement price is 14,100 yuan/ton (liquid high-quality product VI). Monthly acceptance and withdrawal), which is 1,300 yuan/ton lower than the settlement price in June.
This year, caprolactam has been under pressure from high costs and weak demand.
Since caprolactam fell into losses in February, large-scale production shutdowns occurred in May, but it is still difficult to change the situation of loose supply. Calculated based on the production cost of 5,500 yuan, the loss of caprolactam expanded from 1,000 yuan/ton to 2,100 yuan/ton. (In fact, some large-scale production in Shandong Province The factory cost is around 5,000, but it also costs 1,500).
At present, the overall operating load of the caprolactam industry continues to gradually decline: Shandong Dongming will stop at the end of the month and is expected to take 20 days; Qinghua will stop; Baling Petrochemical will open a line; Nanjing Dongfang will stop 200,000 units; Sanning will stop until the end of the month, with a load of 40% to 50%.
Downstream inventory pressure is high, customers are slow to digest purchases at low prices, and the support of nylon is worrying. It can be said that “lose cars first, then lose houses, inventory accumulates, and there is no place to talk.”
Desire to purchase raw materials drops to freezing point
Weak demand has become the main factor dragging down the market
Terminal demand is the biggest factor dragging down the sluggishness of the nylon industry chain. Since the second quarter of 2022, weaving operations have been at a low level in recent years, even lower than when the epidemic broke out in 2020. Now the off-season is obvious, the textile market has become increasingly cold, and market transactions have dropped again. Cloth merchants’ enthusiasm for stocking up has declined, and gray cloth inventories have climbed to high levels again. Faced with the falling prices of upstream textile raw materials, downstream users are not in a high purchasing mood. The reason is that on the one hand, it has entered the high temperature period in July.�, most weaving production bases are willing to stop temporarily. It is said that some manufacturers have taken holidays, and the power supply situation in some areas of the country is relatively serious.
Recently, there have been notices in the textile circle about off-peak production by companies in many places. The production companies involved include many textile, printing and dyeing and chemical fiber companies. While increasing the production costs of manufacturers, the operation of many textile printing and dyeing factories has been greatly restricted.
On the other hand, for downstream weaving companies, chemical fiber raw materials such as polyester and nylon continue to experience roller coaster prices. Prices fluctuate and are unstable. Procurement needs to be cautious. The end-use textile and clothing demand is sluggish and inventory is high. If raw materials are purchased at a high level, Investment will undoubtedly once again increase the financial burden on enterprises. Facing the nylon industry chain, from cyclohexanone-caprolactam-polymer chips to nylon spinning, the entire industry chain is losing money. Not only are production companies not very motivated, but also in the face of sluggish order demand and high inventory pressure, the desire to purchase raw materials is also low. Down to freezing point.
Therefore, the contradiction between market supply and demand is still in the repair period. At present, terminal demand has not shown improvement. End customers mainly need to follow up. Downstream weaving factories are not enthusiastic about purchasing. Some customers even decide production based on sales. In the short term, they mainly consume raw material inventories. The operating load rate of the downstream weaving industry remains low for the time being. , the demand is running weak, but the industry still has expectations for the “Golden Nine and Silver Ten”, and there may be a centralized replenishment node.
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