Understanding of the slight rise of CPL

Starting from June 6th, CPL RMB spot prices in East China market have gradually rebounded. As of June 8th, the transaction prices in Jiangsu province were generally required to 12,150-12,200yuan/mt, an increase of 350-400yuan/mt compared to last week, slightly exceeding market expectations.

Considering the production and demand situation in the upstream and downstream industries, the supply and demand balance of CPL in June is indicating a de-stocking structure.

Although the demand for conventional spinning chip still faces pressures, and the smooth sales are not easy, it cannot be denied that the stable operating rate of high-speed spinning chip plants still provides strong support for CPL.

From the recent changes in the operating rate of upstream and downstream industries, it is actually relatively favorable for CPL. There is a certain loss in CPL supply, but the operating rate of downstream nylon 6 has increased, and new devices have been put into production. On the other hand, a large nylon 6 plant in Jiangsu has reached full capacity operation in May and remained stable operation ever since, at the same time, Luxi Chemical still actively purchased CPL from the spot market. In addition, the new CPL facility of Eversun meets difficulties in increasing production due to hydrogen issues in the short term. With these production issues, it is not difficult to understand the fact of the short-term tight supply for CPL.

Does this mean that CPL has bottomed out? It's probably still too early to make a conclusion at the moment.

The short-term operation changes are favorable for CPL, but from the demand side, it still faces the problem of seasonal downturns, which is irreversible, and also determines that the rise in raw materials is not sustainable. Speculative demand may gradually release at the currently low price, but from the trend of commodities, there is still no confirmed signal of a bottom.

Chart Wenhua Commodity Index monthly K-line and weekly K-line

The monthly Wenhua Commodity Index shows that June is a critical time window that may turn the tide, but based on the weekly K-line, it seems that the timing is 3 weeks later, which coincides with the end of this month. It is not ruled out that the commodity index will continue to fall towards the monthly K120 and 250 moving averages this month.

From the downstream procurement point of view, the end of the month happens to be the time for downstream concentrated replenishment. On the other hand, the macro market's policy expectations may also be introduced in early July (early in the second half of the year).

From the perspective of the industry's own logic, we have noticed that Luxi's cyclohexanone has recently been restarted, and it is reported that the CPL equipment is scheduled to resume production in June. However, it is difficult to determine the current restart progress and capacity arrangements and it may become clear later in the month.

Therefore, based on the above analysis, the current stage is still a time for waiting and observing, and it is not advisable to act recklessly.