Nylon filament demand partly warms in September, but limited

After enduring the slow season in July and August, September is theoretically expected to see a rebound, often referred to as the "Golden September." Indeed, demand has improved slightly compared to the previous month. However, under the dual pressures of capacity expansion and slowing demand growth, the extent of this improvement is minimal and offers little relief to filament factories.

There are products experiencing a rebound in demand, but they are few. For example, nylon 6 dull DTY 15D/34F has recently seen steady and growing demand, primarily used in the Shengze water-jet spinning market for producing three-in-one outerwear fabrics. Similarly, dull DTY 30D/34F, mainly applied in the Shantou circular knitting market, has also shown relatively good demand growth recently. Of course, some conventional products have seen slightly better demand compared to August, but this is only due to a slight recovery in downstream fabric mills' operating rates and a marginal increase in rigid demand-far from being considered "booming."

Filament prices continue to decline at an accelerating pace. Since late July, raw material prices have fluctuated within a narrow range, rising and then falling, with fluctuations staying within 500yuan/mt. As of now, raw material prices have returned to levels near the lows of late July. During this period, nylon filament prices have continued to decline, with drops generally by 300-500yuan/mt or more, and some specifications falling by 800- 1,000yuan/mt. Even though many specifications have hit historical lows and are causing significant losses, the effectiveness of promotional efforts has become increasingly limited.

Filament plants' operating rate continue to decline. Under the dual pressures of high inventory and substantial losses, most filament mills have gradually reduced production during July and August. Medium-sized mills have generally lowered their operating rates to around 70%, with some smaller mills reducing rates to 50-60%, and only a very few maintaining rates of 80-90% or higher. A small number of large integrated mills had previously maintained high operating rates of over 90% to ensure material balance. However, as the effectiveness of low-price promotions diminished, they have also gradually joined the production-cutting trend. As of now, their operating rates have mostly dropped to around 80-85%, and the industry average operating rate has fallen to approximately 75%.

High inventory burden remain difficult to alleviate. The current industry average operating rate is 17% lower than the same period last year, while inventory levels are 22 days higher. Over the past two months, the industry has continuously lowered processing fees to stimulate transactions, but the effectiveness of this strategy has dwindled, forcing mills to resort to production cuts to control inventory. However, on one hand, downstream fabric mills have not seen significant recovery in their orders, or they are burdened with high finished product inventory, making destocking slow. On the other hand, the continuous decline in nylon prices this year has undermined fabric mills' confidence in nylon pricing. As a result, fabric mills are not increasing their procurement volumes despite low nylon filament prices, relying only on rigid demand, which is insufficient to help filament mills reduce inventory. While filament mills continue to cut production, this only slows the rate of inventory accumulation rather than effectively reducing it.

In summary, although the traditional textile "peak season" has arrived, demand in some downstream segments, such as fine-denier DTY, has improved, leading to increased procurement demand for nylon filament. However, these segments occupy a small market share and have limited impact on the overall nylon market. Fabric mills have ample finished product inventory, and even with the seasonal slow recovery in demand, their production enthusiasm remains subdued.

Additionally, it is worth noting that fabric mills in Shengze and Yiwu are planning to reduce or halt production during the National Day holiday, with some water-jet spinning manufacturers planning to suspend operations for 3-7 days or reduce production for 10-15 days. Mills in other regions also have similar plans to varying degrees. For filament mills, this means that consumption volumes are likely to decline. While filament mills experienced a wave of destocking in October last year, replicating this trend in 2025 will be challenging due to both raw material and demand-side constraints.