OUTLOOK ’11: Robust China demand backs strong Asia nylon values

28 December 2010 03:41  [Source: ICIS news]

By Junie Lin

SINGAPORE (ICIS)--China’s nylon demand is expected to grow at about the same pace as its economic expansion next year, boding well for Asian spot prices of semi-dull nylon 6 (or polyamide 6) chips, industry sources said.

Semi-dull nylon 6 chips surged by 20% from the start of the year to $3,100-$3,120/tonne (€2,356-2,371/tonne) CFR (cost & freight) China on 22 December, ICIS data showed.

Prices would continue to increase in 2011 as there was increasing preference for higher quality nylon fabrics among Chinese consumers, who were showing willingness to pay good money for the material, they said.

However, China’s nylon industry may face operational challenges as its capacity expansion would come at a time when supply of feedstock caprolactam was expected to remain tight, they said.

The anticipated anti-dumping duties that China would impose on caprolactam imports from the EU and US were also expected to affect feedstock supply, market source said.

Nylon consumption in China was expected to hit 2.3m tonnes by 2015, accounting for around 8% of chemical fibre consumption in the country, said a producer in northeast Asia.

Over the next two to three years, nylon consumption in China was projected to post an annual increase of more than 10%, with the country’s economy expected to expand by about the same rate.

However, demand for polyester, a cheaper alternative, has been outpacing the demand for nylon for more than a decade.

Polyester is half the cost of nylon, is becoming more versatile and is making gradual inroads into areas that were once dominated by nylon.

Nonetheless, players in the nylon industry said that nylon has niche applications in products such as coats, underwear, sportswear, ladies’ stockings, socks and gloves.

For example, denier nylon stockings have fine threads that ensure transparency, elasticity, comfort, airiness and smoothness, which polyester could not emulate.

“Weight for weight, measure for measure and for just plain functionality, nylon is better than polyester,” said an Asian producer.

Demand for synthetic textile substitutes had been strong since early this year because of a shortage of cotton, following floods in Pakistan and Taiwan, supporting nylon prices.

China is the world’s largest producer, consumer and exporter of textiles. It also imports more than any other country, accounting for 24% of the global total.

So far this year, China imported 682,000 tonnes of nylon chips, up by 26% year on year, according to data from China Customs.

($1 = €0.76)

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By: Junie Lin

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