CPL market rebounds on intensive turnarounds in Apr

Entering the second quarter, CPL market has quickly reversed from soft and weak situation to a currently strong state, mainly due to the recent concentrated maintenance schedules.

The above are the recently announced turnaround schedules for CPL units. In addition, Shenma and Baling Hengyi have also experienced some minor production cuts in early April.

Among the listed turnarounds, Yangmei and Sanning's units are still undergoing planned maintenance. However, the sudden shutdown (plan) of two large units, Lunan and Risun Cangzhou this week (Apr 8-12) has had a significant boosting effect on the CPL market. First, these units have large production capacities, and second, they are currently major players in the East China CPL market. Their successive shutdowns mean a short-term tightening of CPL spot supply. Therefore, as soon as this news broke out, CPL spot prices along with downstream chip prices have surged or even halted trading. As of April 10, negotiated CPL prices in East China have risen to around 13200yuan/mt or even higher.

CPL RMB spot has witnessed a rise of 700yuan/mt in 7 working days, from 12500yuan/mt at the beginning of the month to 13200yuan/mt. This round of rebound has been quite rapid. The first reasons is that CPL profits have been significantly squeezed in the previous period, with processing fees hitting historical lows. The second is the strong performance of downstream demand, with ample profit margins in chip production and a generally favorable market environment, providing a solid foundation for CPL price increases.

In late March, the author has mentioned that for nylon industry chain in April-May, once a significant reduction in CPL production occurs, effective destocking will begin, and the price trend and market heat are likely to reverse. The logic behind this is the strong raw material (benzene) prices and the still favorable demand situation. Looking at inventory levels, processing fees, and operating rates, the current performance of nylon 6 chip is a rare win-win situation in recent years. Ahead of the Qingming Festival (Apr 4-6), downstream demand for replenishment surged, with chip spot prices rising even more than CPL, and processing fees showing signs of expansion rather than reduction. This unexpectedly strong performance of chip processing fees will be further analyzed by CCFGroup in the near future, but not elaborated here.

From the current perspective, due to the significant pressure from previous CPL losses, sellers in this round of price increases have a strong mindset to turn losses around. With chip prices generally rising to above 14500yuan/mt, it is expected that CPL prices will likely hit a high of 13500yuan/mt in the short term. Whether further strengthening will occur depends on the push from benzene prices and whether there are any new variables in CPL supply and demand in the latter part of the month.