Cost Fluctuations and Supply-Demand Game: PA6 Market in April Prone to Rise but Resistant to Fall

Cost Fluctuations and Supply-Demand Game: PA6 Market in April Prone to Rise but Resistant to Fall

Cost fluctuations are evident, the chip market is experiencing significant volatility, some downstream orders are struggling to keep up, and market transactions are gradually shifting towards demand-driven follow-up.

Driven by costs, the PA6 chip market showed a clear volatile trend this month. Early in the month, supported by strengthening raw material prices and tight supply, the market sentiment was strongly bullish, with prices for both conventional spinning and high-speed spinning chips increasing significantly. Subsequently, as geopolitical tensions eased, leading to a pullback in crude oil and benzene prices, chip prices also experienced a noticeable decline. New orders in the downstream polymerization end-use industries fell short of expectations, leading the market to gradually return to rational purchasing of chips. This, combined with increased profit-taking selling by traders, resulted in a more cautious overall market transaction atmosphere, influenced by demand. As of today, the market price for conventional spinning PA6 chips in East China is 13,200-13,300 RMB/ton, while the spot price for high-quality high-speed spinning chips in the East China market is 13,700-13,900 RMB/ton on a delivered basis with acceptance.

This month, the PA6 polymerization industry saw new production capacity, primarily located in Central China, which is also a core raw material supply area, aimed at reducing transportation costs. Furthermore, the recent new capacity additions are mostly large-scale production lines designed to lower overall energy consumption during production. In March, PA6 polymerization output was 583,500 tons, an increase of 70,100 tons from the previous period and a decrease of 26,500 tons year-on-year. The capacity utilization rate was 71.48%, up 1.52 percentage points from the previous period but down 13.31 percentage points year-on-year. The main reasons for this month's output change were the impacts of raw material supply and downstream demand. On the raw material side, the supply of caprolactam recovered in March, with industry capacity utilization gradually returning to around 80%. This increased raw material supply provided the conditions for polymerization enterprises to release new capacity. Concurrently, the restart of some units in northern China further contributed to the increase in PA6 chip output. On the demand side, end-market demand still showed no significant improvement, and downstream factories mostly maintained demand-driven procurement of chips. This, combined with profit-taking sales by market traders, led to a significant price inversion between market prices and factory prices. The persistent suppression from the demand side ultimately resulted in total PA6 chip output for the month remaining below the level of the same period last year.

In April, some domestic caprolactam units are scheduled for maintenance, raising expectations of tighter spot raw material supply. This may cause some PA6 polymerization supporting units to reduce production passively due to insufficient raw materials. Additionally, planned maintenance for some PA6 polymerization capacity in the Fujian region may lead to a significant decrease in the overall domestic PA6 polymerization supply in April compared to March.

Spot benzene supply is tight, and some caprolactam plants have scheduled maintenance, reducing the supply of raw materials for polymerization. This may make it difficult for the caprolactam market to decline. Although the demand side appears somewhat weak, some factories still have new orders to follow up on. Therefore, it is expected that the PA6 market in April will be prone to rising but difficult to fall.

Under the overall tone of the PA6 market being prone to rise and difficult to fall in April, flame-retardant PA6 is also expected to experience a synchronous market movement. The upward volatile trend of upstream caprolactam prices will directly increase the production threshold for flame-retardant PA6 through cost transmission. Meanwhile, the rigid demand for flame-retardant materials in end-use sectors like electronics, electrical appliances, and automobiles provides solid support for its price.

Although some downstream enterprises may slow down their purchasing pace due to cost pressures, the continuous expansion of emerging fields such as new energy vehicles and 5G base stations suggests that market demand for flame-retardant PA6 will maintain steady growth. It is anticipated that the flame-retardant PA6 market in April will exhibit a pattern characterized by "cost support anchoring prices, demand pulling growth." The price center is expected to shift slightly upwards, and certain regions may experience phased price fluctuations due to tight supply.