China’s nylon 66 chip price drops to 1.5-year lowest –
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China’s nylon 66 chip price drops to 1.5-year lowest

2022-05-18 08:02:18 CCFGroup

Non-stop decline in 2022 & historical price trend



Nylon 66 chip price has extended almost non-stop decline after 2022 Chinese Spring Festival, and the drop in April has broken previously forecasted technical resistance line 30,000yuan/mt. On April 27, 2022, the prevailing spot price index of general-plastic-grade nylon 66 polymer has fallen to 26,500yuan/mt by Apr 11, with a year-to-date decline of 10,000yuan/mt, or a downward ratio of 27.4%.


The first round of sharp decline was during late February to early March, under a mixed pressure from both demand and supply side. This time, the sudden supply glut from a trading company was the most important reason.


During Mar 10 to Apr 11, the decline in nylon 66 market slowed down, but at the same time, its peer product nylon 6 chip market was almost steady with narrow rebounds even. 


The most recent sharp decline appeared this week (starting Apr 22 2022), as price fell by 2,000yuan/mt in just 4 trading days




Looking at nylon 66 polymer price in a longer time span. The latest same low rate was seen on November 18, 2020, but the lowest point in the year of 2020 was 16,600yuan/mt, almost 10,000yuan/mt lower than current rate. It seems that there is still large downward space for current nylon 66 market, and this will be theoretically supported by the cost and profit comparison of the two years in below part. 


Sharp decline, nylon 66 polymer profit comparison and future trend

On demand side, downstream modified plastic plants only saw mediocre order taking; demand from high-viscosity cord fabric plants was weakening evidently in the first quarter, and burdened nylon 66 market evidently. To tell from end users’ market, under the impact of the pandemic, automobile and electronics market performance was weak, and this gave a negative feedback toward nylon 66 industrial chain as a whole. 


On supply side, firstly there was a sudden supply glut as a Chinese trader imported a large number of adiponitrile and assigned Chinese nylon 66 manufacturers and sold polymer at much lower rate to the spot; worse influence was rooted in suppliers worry of an outbreak in feedstock ADN and HMDA supply, which would lead to significant increase in nylon 66 polymer. As the supply of ADN and HMDA had been almost dominated by limited import sources for all the years since the beginning of this industry in China, nylon 66 polymer production was under this restrict. Once feedstock bottleneck is lifted out, it is not difficult to see a significant rise this industry, and its price gap with nylon 6 and other chemical materials will be narrowed down substantially. Tianchen Qixiang's startup of its HMDA plant in end-March was a solid proof to insiders' concern. 


In the year of 2022, there are total of 70kt/year new capacity expected to start up, same increment as in 2021. The total nylon 66 chip capacity in China is expected to reach 690kt/year, with an annual growth rate of 11.3%. 


Weak demand, heavy pandemic influence, and longer supply expectation are burdening suppliers’ mentality, and they were endeavoring to liquidate stocks with lower prices before the other shoe falls. 


Such heavy falls is squeezing out nylon 66 polymer production margin, but if we compare it with the situation in 2020, the current margin was not very bad actually.



Comparing the situations in 2020 and 2022, we could see that when nylon 66 polymer prices hit the bottom in 2020, adipic acid and HMDA prices were both relatively low. The rough raw material cost (50% of AA and 50% of HMDA) on June 3 2020 was 12,650yuan/mt, 11,850yuan/mt lower than the cost on April 27 2022. However, the price spread between these two date was only 9,900yuan/mt. It means that based on margin of Jun 3 2020, there is still downward space for nylon 66 chip, even if the raw material prices keep steady.


Moreover, the recent forecast for the trends of adipic acid and HMDA is both downward. AA market has been lingering relatively steady in the month of Apr, but transaction is limited. The April contract settlement (not yet released by Apr 28) is expected to fall significantly month-on-month, which will bring down spot prices soon. HMDA price is lowering because of longer supply from Tianchen. And according to a company source from Invista Shanghai, the HMDA production has been kept normal and transportation is not cut down by the pandemic, as there are still trucks available.