Nylon 6 chip export surges under shadow of reciprocal tariffs

On April 2, 2025, U.S. President Donald Trump announced the implementation of "Reciprocal Tariffs" as part of his "America First" trade policy, aimed at addressing long-standing trade deficits and unfair trade practices. The tariff policy consists of two parts: baseline tariffs and reciprocal tariffs.

Baseline Tariffs: Starting April 5, 2025, a uniform 10% tariff will be imposed on all imported goods from countries other than Canada and Mexico.

Reciprocal Tariffs: Beginning April 9, 2025, higher tariffs will be applied to approximately 60 countries and regions, with rates ranging from 11% to 50%, based on the level of trade imbalance determined by the U.S.

Figure 1. Tariff rates for major countries and regions

Note: Tariff rates for some countries may change due to subsequent negotiations or policy adjustments.

However, just one week later, due to strong opposition from allied nations and severe market volatility, the U.S. government announced on April 9, 2025, a 90-day tariff exemption for certain countries (excluding China), temporarily reverting to the 10% baseline rate. Meanwhile, tariff tensions between the U.S. and China escalated. By April 9, the total U.S. tariff rate on Chinese goods reached 145%, and on April 12, China further raised retaliatory tariffs to 125%.

Although the export volume of key chemical raw materials in nylon industry chain-such as CPL (caprolactam) and nylon chips-to the U.S. was originally small, limiting direct impacts, the broader global economic shifts triggered by this trade conflict have significantly affected China's nylon export market. According to Chinese customs data, China's nylon 6 chip exports in April 2025 reached approximately 63,500 tons, a year-on-year increase of about 33%, marking the largest monthly growth rate that year. This surge in exports was primarily driven by three factors:

1. Sharp price cuts in China's nylon 6 chips undercut other import channels

2. Supply gaps from reduced or halted polymerization operations in some countries

3. Rush orders stimulated by the tariff exemption window

1. Sharp price cuts in China's nylon 6 chips undercut other import channels

China's nylon 6 chips have been steadily gaining market share internationally due to their cost advantages. In April 2025, China domestic nylon 6 chip prices dropped significantly due to falling raw material costs and weak end-demand, further enhancing their competitiveness and accelerating the substitution of other import sources.

From an export structure perspective, China's nylon 6 chip exports saw comprehensive and notable growth across major markets in April 2025, including Asia, Europe, and South America. Exports to Thailand, Brazil, Belgium, and Turkey all recorded year-on-year increases exceeding 50%, with exports to Turkey surging over fourfold. Even in established markets like South Korea and India, where monthly exports have stabilized at over 10,000 tons, China's exports still grew by more than 12% year-on-year. Notably, India, remaining the largest export destination for Chinese nylon 6 chips, posted an 18% year-on-year increase, demonstrating strong market resilience and expansion potential.

In the short-term, following Trump's announcement of reciprocal tariffs, CPL prices plummeted by nearly 500yuan/mt in a single week. Coupled with blocked textile exports to the U.S. and shrinking market orders, polymerization companies were forced to slash prices to boost shipments, leading to a decline in chip prices.

In the long-term, China's nylon industry is undergoing rapid consolidation and vertical integration. New production capacities feature advanced technology and lower costs, while outdated capacities are being phased out. Amid weak domestic and external demand and fierce competition, prices have entered a sustained downtrend, further solidifying China's price advantage in export markets.

2. Supply gaps from reduced or halted polymerization operations in some countries

April 2025 marked the first month in recent years with a year-on-year decline in CPL exports. Structurally, aside from Italy, most major export destinations saw reduced volumes, with India experiencing the sharpest drop-down 3,663 tons (55.9% year-on-year), accounting for the bulk of the overall decline.

The decrease in CPL exports alongside the rise in nylon 6 chip shipments reflects insufficient polymerization capacity overseas. In recent years, China has concentrated on expanding polymerization facilities, which boast newer technologies, higher efficiency, better cost control, and superior product quality. Most Chinese polymerization plants also have integrated raw material production, allowing more flexible pricing adjustments. In contrast, overseas polymerization capacity expansion has stagnated, with aging equipment leading to high energy consumption, inferior product quality, and elevated processing costs, significantly increasing the risk of losses.

Under these conditions, many overseas manufacturers find it more cost-effective to import nylon 6 chips directly from China rather than processing CPL locally, driving up overall import demand.

3. Rush orders stimulated by the tariff exemption window

While the U.S.-China tariff exemption took effect in May, the 90-day exemption for other countries began in early April. This temporary policy prompted U.S. textile and apparel importers to stockpile inventory in advance, creating a wave of concentrated orders.

Although April's U.S. textile import data has yet to be released, the country's retail sales grew by 5.2% year-on-year that month, indicating robust consumer demand. Continued improvements in employment and wages, along with falling energy prices, bolstered U.S. consumer spending. Additionally, the significant gap between import and retail prices in the U.S. textile and apparel market means the 10% baseline tariff remains acceptable to most importers. The short-term surge in export orders encouraged companies to increase imports to meet local raw material shortages, further boosting China's overall PA6 exports.

In summary, the substantial growth in China's nylon 6 chip exports in April 2025 resulted from multiple converging factors. Driven by expanding domestic price advantages, overseas production shortages, and short-term international order surges, China's position in the global nylon 6 market is steadily strengthening. Moving forward, if China can sustain its quality and cost advantages while adopting flexible policies, it stands to further expand its market share.