M O N T H LY R E P O R T

July 2021

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July Nylon 6 Chip Market Report

1. Market Review

FIGURE 1
1-Jul 30-Jul Changes Monthly average
RMB price for domestic N6 HS chips 15,170 15,670 3.30% 15,645.00
USD price for imported N6 HS chips 2,300 2,300 0.00% 2,300.00
RMB price for domestic N6 CS chips 14,700 14,850 1.02% 14,961.36
Note: HS- high-speed spinning, CS- conventional spinning

Source: CCFGroup.com

1.1 Nylon 6 chip RMB market

Nylon 6 Conventional Spinning Chip Price Trend and Margin

yuan/mt CPL Processing cost N6 CS chips
17000

14000

11000

8000

Source: CCFGroup
5000

In July 2021, nylon 6 conventional spinning (CS) chip market was basically tracing down feedstock caprolactam market.
Downstream demand in the month was average. The modified plastic market was restricted by limited vehicle
production, which had been curbed globally by the shortage of micro chip. Staple fiber market was still in slack season,
and consumption for nylon film was lackluster. There were no good points fund in downstream sectors. Therefore,
nylon 6 CS chip makers were under severe sales pressure, and at the same time, they were suffering great losses due
to the narrow margin over CPL, which was for a time almost zero (chip payment by cash ex-works, CPL by 6 months
payment and delivered). Chip producers were facing difficulties and had lowered operating rate further, just in hope
of controlling inventory and reducing losses. Early in the month, some plants had raised offers for medium-viscosity
bright CS chip up due to cost pressure to 16,000yuan/mt, while North China plants still offered low at 14,500yuan/mt,
CCFGroup Monthly Report July 2021

T/T cash, delivered. The wide gap caused confusion in the market. Since late July, the price gap between different
sources narrowed down. In East China, mainstream trading was at 14,700-15,000yuan/mt, T/T cash, delivered. By end-
Jul, there was narrow increase in the weighted average rate, as downstream buyers came to replenish intensively. But
as benzene price tumbled continuously, buyers returned to sidelines.

Nylon 6 High-speed Spinning Chip Price Trend and Margin

yuan/mt CPL Processing cost N6 HS chips
18000

15000

12000

9000

Source: CCFGroup
6000

In July, nylon 6 high-speed spinning (HS) chip spot had risen first and then stabilized. Early in the month, market was
backed up by the bounce in CPL market. High-end-HS chip spot gradually rose from 15100-15300yuan/mt to 15900-
16200yuan/mt, 6 months payment, delivered. But the jump was too fast and big, and was not successfully transmitted
to downstream, so transaction was sluggish at the high rates. By the end of the month, sellers had offered steadily
while transaction lingered sluggish. Low-end HS chip prices were mainly in narrow range-bound. Offers had risen from
14,600-15,000yuan/mt to 15,400-15,800yuan/mt early in the month, while actual traded levels only reached as high
as 15,300-15,400yaun/mt. By late July, effective trades lingered around 15,100-15,300yuan/mt, 6 months payment,
delivered.

In nylon 6 HS chip contract market, the contract processing fee (the premium based on Sinopec’s contract settlement)
for HS chips was basically stable. That of Jiangsu and Zhejiang (East China) plants were basically between 1,050-
1,200yuan/mt, and that of Fujian and Guangdong (South China) were basically between 1,200-1,300yuan/mt. The
July contract fulfilment was not satisfactory, as the settlement price had reached the year-to-date highest, while most
downstream sectors were in slack season and they only replenished to meet basic production demand. The trading
of dull HS chip was still better than that of semi-dull ones, while supply was increasing and buyers had lower interest
to build stocks.

1.2 Imported chip market

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China USD CPL & Nylon 6 Chip Price Trends

USD/mt CPL (CFR China) USD price for N6 HS chips

2500

2000

1500

1000

500

In July, prices of Taiwan-made nylon 6 high-speed spinning chip narrowly weakened. As Taiwan-based HS chip prices
had not fully caught up with feedstock cost in the previous months, and chip suppliers maintained their offering rates
in July still. Trading for semi-dull or bright HS chips was around $2,290-2,310/mt or slightly above CIF China, L/C, 90
days. The price was evidently higher than RMB-based sources and buyers had lower interest to import.

2. Plant operation and inventory

Nylon 6 chip plant operation in China

Nylon 6 Textile Chip Nylon 6 Industrial Chip
%
100

90

80

70

60

50

40

By the end of July, the weighted average operating rate was assessed around 65.5% in Chinese mainland and maintained
at 46% in Taiwan.
The operating rate of nylon 6 textile-grade chip (HS chip) plants inched up by 1 percentage points month-on-month to
73%, as most plants maintained steady operation. Highsun had restarted its production line, which had been shut for

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turnaround, around mid-Jul.

Industrial-grade chip (CS chip) plant operating rate dropped by 4 percentage point to 58%. Inventory pressure continued
to burden CS chip plants, and demand lasted to be weak, and CS chip plants were under evident losses. CS chip plants
had to cut production further, and this helped balance sales and production eventually.

Nylon 6 chip inventory in China

day Nylon 6 HS chip inventory Nylon 6 CS chip inventory
30
25
20
15
10
5
0
-5

Inventory of nylon 6 HS chip waved between 16.5-17.5 days in July, and that of CS chip plants had built up to as high as
18.5 days in the mid of the month, and then it reduced with expanded trading at end-Jul to 13.5 days.

3. Nylon 6 chip supply

Nylon 6 chip monthly imports of China

2020 2021 y-o-y change
50
18% 52% 26% 23%

40
-51% -38%

30
'000mt

20

10

0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
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CCFGroup Monthly Report July 2021

May-21 Jun-21
Import origin Volume (ton) Price ($/mt) Import origin Volume (ton) Price ($/mt)
Taiwan China 4507 2208 Taiwan，China 2977 2348
Thailand 3407 1613 Thailand 2466 1534
Malaysia 3330 1266 Malaysia 2446 1269

Russia (RU) 3249 1934 Viet Nam 2144 1232

Vietnam 2812 1498 Russian Federation 1905 1707

Indonesia 1221 1339 Hong Kong，China 1217 1548

Belgium 1068 2090 Indonesia 1007 1420
Hong Kong 940 1454 Belgium 793 2174
Japan 646 3825 Bangladesh 572 952
South Korea 539 2632 Japan 522 3687
Other 2055 2490 Other 2352 2974
Total 23773 1868 Total 18399 1863
(According to China Customs' announcement, import and export data in January-February is released aggregately.)

Import: According to the Customs, nylon 6 chip import volume totaled 18.40kt in June 2021, down 38% from the same
period of last year, and down 23% month-on-month. The June average import prices were at $1,863/mt.

Since most of the downstream areas were in the off-season in June, and the price of nylon 6 had risen to a high level
during the year, buyers were cautious to purchase of nylon 6 chip, and their interest toward the less price advantageous
imported sources was even lower. Therefore, nylon 6 chip import volume dropped significantly.

Output: In July, nylon 6 chip production totaled around 335kt, down 5kt from that in June. Chip production may
narrowly increase to around 350kt.

4. Market Outlook
Supply and demand problem will not worsen in August, since nylon 6 chip supply will not increase evidently (from
restarted plants or new capacity), and downstream market is transiting from the traditional slack season to peak
season. But given the heavy stocks accumulated, it is not likely to see a demand-driven market still, while remain
under the influence of upstream. CPL price is still expected to be resilient in Aug, and it may be a strong support to
polymer market. And after suffering long-term deficits, nylon 6 CS chip plants may revise up their margin over CPL
when upstream market is in a narrow decline. Demand for HS chip remains healthy and price may wave in line with
Sinopec’s contract adjustment.

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DISCLAIMER
All opinions, news, analysis, prices or other information contained on this report is provided by analyst of Zhejiang Huarui
Information Consulting Co., Ltd (CCFGroup) as general market commentary and does not constitute investment advice.
CCFGroup will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise
directly or indirectly from use of or reliance on such information. This report or any portion hereof may not be reprinted,
sold or redistributed without the written consent of CCFGroup.

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