The gloomy period for fine-denier nylon fabric

As September draws to a close, the sales season for nylon fabric-primarily used in down jacket fabrics in previous years-has yet to visibly begin this year. An "extended summer" has delayed downstream purchasing demand, while intensified competition from concentrated capacity expansion at fabric mills has pushed the industry into prolonged losses. Similarly affected is nylon dull FDY 20D/24F, a once higher-value-added product that is now also generating widespread losses.

1. Nylon fabric prices hit new lows, losses widen

In late September 2024, 380T nylon fabric prices rose to 2.9yuan/m. This increase was driven by reduced supply and temporary tightness, as market focus had shifted to fine-denier nylon stretch fabrics. Since then, as supply gradually eased, prices began a downward trend, falling to 2.5yuan/m by early 2025. With new water-jet loom capacity in Northern and Central Jiangsu, and export orders affected by U.S. tariff disputes in the first half of the year, industry competition intensified. By the middle of 2025, inventory at some major manufacturers had reached 4-6 months, and 380T nylon fabric prices fell to a historic low of 1.8yuan/m before gradually stabilizing.

As the price decline deepened, losses expanded. At current prices, manufacturers in Shengze are facing losses of about 0.6-0.7yuan/m, while those in Northern Jiangsu are faring slightly better with losses around 0.2yuan/m. The continuous price drop this year has led to significant inventory devaluation losses for fabric mills.

Due to overcapacity and losses, while fine-denier nylon fabric production typically continued through the National Day holiday in previous years, widespread production reductions or shutdowns are planned this year, ranging from 3-7 days to 7-15 days.

2. Significant compression in processing margin for nylon 6 dull FDY 20D/24F, widespread losses

This year has seen significant expansion in nylon filament production, with FDY capacity growing faster than POY and DTY, leading to earlier emergence of oversupply. Increased supply, combined with lower raw material costs, drove spot transaction prices for dull FDY 20D/24F down from 21,000-21,500yuan/mt at the beginning of the year to a mainstream 15,500yuan/mt currently, with some transactions as low as 15,000yuan/mt or below-also hitting historic lows.

With a rising proportion of 16-end spinning equipment in new front-line machinery compared to the industry's previous standard 12-end spinning, production efficiency has improved and costs have decreased. Competing for market share through price reductions for volume has become the mainstream strategy this year, significantly compressing industry processing margins. Last year, market transactions were mostly contract-based, with processing margins around 10,000yuan (referring to the price difference between FDY and Sinopec's CPL contract settlement). By early this year, this had fallen to 9,000-9,500yuan, gradually dropping to 8,500yuan (some 8,000yuan) in the second quarter. In the third quarter, the contract model basically became ineffective, and spot processing margins further compressed to 6,400-6,500yuan, with some below 6,000yuan. Even 16-end spinning equipment can barely maintain cash flow.

Is there any chance of relief this year? Possibly. For example, fabric mills might have an opportunity to clear some inventory after temperatures drop in October. However, social inventory of nylon fabric remains high, and even with some destocking, it is unlikely to be thorough. Moreover, the production pipeline from fabric to dyeing/finishing to garments is time-consuming, making large last-minute orders less likely later in the season. From the perspective of fabric mill operating rates, resuming production after the National Day holiday is unlikely to show significant improvement compared to September. This also implies that rigid demand consumption for nylon FDY will be difficult to restore, and the current tense situation for FDY is unlikely to ease in the short term.