Asia nylon demand recovery unlikely amid weak downstream run rates

Author: Leanne Tan

2020/08/11

SINGAPORE (ICIS)--Hopes of an August demand recovery in Asia’s nylon market are fading, as downstream manufacturing run rates remain curtailed amid slow end-use consumption.

Downstream manufacturers in China are running their factories at an average of 60-70%, according to market players’ estimates.

Moreover, many are currently holding onto high raw material stocks, diminishing their need to make fresh replenishments.

This has consequently further limited demand for nylon chip imports in China.

Market players deem any significant demand uptick in August to be unlikely, given that the market remains in the throes of a seasonal lull.

During this time, producers in China have also been actively reducing offers in the domestic market in the hopes of spurring buying activity.

Despite the slow import cargo uptake, some nylon producers in Taiwan still sought to maintain offers in the week. Others retreated to the sidelines.

Many have already lowered their offers for August-loading cargoes over the past few weeks and are unwilling to make any further cuts, given squeezed margins.

“No matter how steep the discount, it will be futile as demand is going to stay muted,” a northeast Asian producer said.

Offers for nylon chips were mostly at $1,300/tonne CFR (cost and freight) China this week.

Spot import prices were last assessed at $1,280-1,300/tonne CFR China on 4 August, according to ICIS data.

Market players are divided over the outlook for September.

September typically marks the end of the traditional lull period, and some market participants are hopeful that demand in China will gather momentum ahead of the long holiday in early October.

Other market players hold a more pessimistic outlook for September, questioning if the anticipated demand recovery will materialise.

Discouraging global macroeconomic indicators amid the coronavirus pandemic could continue to weigh on sentiment in the near-to-medium turn.

Focus article by Leanne Tan

(Nylon key end-uses included automotive textiles, shoes and shoe soles. (Photo by Diego Azubel/EPA/REX/Shutterstock)