Major events of Chinese nylon market in 2023

Q1 2023: CPL surges, downstream recovery lags

Continuous increase in CPL before and after Spring Festival

The price of benzene rose before the 2023 Spring Festival, leading to an unexpected increase in raw material cost. After the Spring Festival, major CPL factories such as Cangzhou Risun, Dongming Risun, Hualu Hengsheng, Lanhua Sci-tech, and Nanjing Fibrant experienced different degrees of production reduction and unplanned maintenance due to equipment failures, breaking the supply and demand balance of CPL and pushing CPL prices higher. CPL achieved the largest monthly increase in 2023.

Popular nylon filament specifications in short supply

In March, the demand for various products, particularly sun-screening products, increased sharply. Nylon textile filament specifications such as dull FDY70D/48F, semi-dull FDY40D/7F, 20D monofilament, and some DTY specifications were in short supply, with price increasing by 1,300-1,500yuan/mt, far exceeding the trends of raw materials and regular specifications, forming an independent market trend. For example, dull FDY70D/48F was in short supply in March and April, with a monthly increase of nearly 1,500yuan/mt, far exceeding the trend of raw materials.

Tianchen Qixiang's Nylon 66 plant successfully started operation

On February 11, 2023, China Chemical Tianchen Qixiang's Nylon 66 plant successfully started operation. Following the successful start of its acrylonitrile (ADN) plant on March 22, 2022, and its hexamethylenediamine (HMDA) plant on March 31, 2022, Tianchen Qixiang's polymerization plant started operation smoothly this year, marking another breakthrough in China domestic production on of nylon 66 industrial chain.

Q2: Differentiation in textile filament and modified engineering plastics market

Contrasting situation for PA6

The second quarter laid the foundation for the entire year. Firstly, China domestic demand for nylon textile filament continued to improve, with various varieties performing well. Secondly, terminal consumption in real estate, automotive, and home appliance industries remained weak, leading to insufficient support for the modified plastics market. The extreme differences in demand between these two terminal markets laid the foundation for the differentiation of nylon 6 bright conventional spinning chip (applied to engineering plastics) and semi-dull high-speed spinning (applied to textile filament) market.

Eversun's 300kt/year CPL plant commenced

The commissioning ceremony for Eversun Technology's second-phase 300kt/year CPL integrated project was held in Xiuyu District, Putian, Fujian. By relying on Eversun Technology and Zhongjin New Material, a complete industry chain from CPL to nylon 6 chip and filament has been formed.

Luxi Chemical's accidental shutdown of CPL and PA6 plants

During the May Day holiday, an accident occurred at Shandong Luxi Chemical's hydrogen peroxide plant, resulting in the shutdown of its 300kt/year CPL plant and the associated nylon 6 chip plants. However, the price of benzene dropped significantly since May 2023, diluting the impact of Luxi's interruption in supply. At the beginning of June, the cyclohexanone plant partially restarted, and Luxi recovered nylon 6 chip production by procuring CPL from external sources. In July, Luxi started to procure hydrogen peroxide again to restore CPL production, marking the end of the impact of the hydrogen peroxide accident.

Q3: Continuous growth in textile filament, accelerated conversion of chip production capacity

Strong demand for textile filament, dull HS chip in short supply

Due to continued strong demand from end user's market, the operating rate of nylon filament industry have remained at historically high levels since March 2023. Most plants have been running at full capacity, even during the traditional off season in the summer. As a result, the production and sales of HS chip have been thriving, especially for dull-grade HS chips, which were in short supply.

Conversion of bright CS chip production lines to semi-dull HS chips

Affected by the significant differentiation in demand between textile filament and engineering plastics markets, several major bright CS chip producers have switched part of production to semi-dull HS chip production in order to improve the operational efficiency. As a result, the price difference between bright CS chip and semi-dull HS chip has gradually narrowed, and in November, the price difference was inverted.

Explosion at Invista's Butachimie plant in France

In June, an explosion occurred at Invista's Butachimie plant in France, resulting in five injuries. The factory was originally scheduled to resume production in mid-July but was delayed until mid-August due to the accident. This factory is the largest adiponitrile production base jointly owned by BASF and Invista, and the only adiponitrile plant in Europe, with a total capacity of 625,000 tons/year of ADN and 165,000 tons/year of HMDA. As the factory was not exporting ADN to China, it has not had a substantial impact on China domestic market.

Q4: New CPL capacities started operation successively

Hunan Petrochemical and Fujian Shenyuan's CPL units have been put into operation one after another.

At the end of the third quarter, Shenyuan's 200kt/year CPL plant and Hunan Petrochemical's 300kt/year CPL plant were put into operation, yielding products in early October. Although the actual demand for CPL was not bad, as the market expected an increase in supply, coupled with the pressure of accumulated inventory in the upstream after the National Day holiday, CPL processing margin dropped to a lowest level within the year.

PA66 saw its largest increase in 2023

Invista Shanghai increased its contract price for HMDA by 1,000yuan/mt and 1,500yuan/mt in October and November respectively, and had planned a 40-day turnaround of its HMDA plant in Shanghai. As Invista announced in early October that it would suspend the production of adiponitrile at its Orange, Texas plant, there was a sharp decrease in adiponitrile imports in October. The proactive push for price increases in nylon 66 raw materials also boosted sales and improved profits in the chip market.

Huafon and Shenma's PA66 polymerization units started operation

At the end of November, Huafon's 60kt/year nylon 66 polymer plant in Chongqing was put into operation. Shenma's 40kt/year nylon 66 unit in Ye County, Pingdingshan, Henan is planned to be put into operation at the end of December.