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SunSIrs: High Inventories are pressing, Weakening the Price of PA6

July 28 2020 08:06:32     SunSirs (Joyce)

Price Trend

According to the data from SunSirs, on the fourth week of July, Chinese PA6 market is constantly weakening. For most of the grades, the spot is apparently declining. Up to July 24, traders quoted price for SINOHESIVE is about 11,000 RMB/ton, having slumped by 9.84% than the beginning of this month.

Factors Analysis

Caprolactam, the upstream of PA6, whose overall market is dropping this month. According to the data from SunSirs, up to July 24,domestic ex-factory price of caprolactam is 9,600 RMB/ton, and the drop has amplified to 7.69% than the beginning of this month. Last month, crude oil supported benzene strongly, and the bottom level of the market support caprolactam. However, this month the port stock of benzene becomes high, and the pick-up slows down. The inventory of regional refinery increases in Shandong, so the pressure that the inventory can’t be released well causes the obstacle for raising the price of benzene. Recently, the price for ingredients is stable, and the support for cost end is limited, so the downtrend of caprolactam is still remaining. In addition, the supply is sufficient, but the downstream demand is lacking, so the whole market is stagnated. It can be estimated that later the price of caprolactam will continue to drop.

The condition of PA6 on the fourth week of July is also affected by the bad market of upstream caprolactam, which illustrates strong bond. Although at the beginning of the month, the peak price is 12,200 RMB/ton, the spot price of PA6 is continually sliding downward. The companies are actively ship the goods, by relatively low quotation that sacrifices some profits. At present, domestic market stock of PA6 is still in a high level, existing the risk of piling. Therefore, when the end of the month is approaching, the companies deliver the goods at a low price without getting immediate money. Facing the minimum price, the downstream still purchases mainly for supplement, and the tactic is inclined to rigid buying. The follow-up from demands is weak, and the stock is relatively numerous, so the attitude within market is not optimistic and the transaction also behaves ordinarily.

Market Outlook

The analyst from SunSirs supposes that domestic PA6 shows drop on the fourth of July, and some grade spots visibly decline. The pullback trend of upstream caprolactam is more clear, and the support for PA6 cost end is receding. The demands from downstream slicing plants is faint, and their buying strategic is waiting for the lowest price. Therefore, the promotion for PA6 transaction is limited, and merchants don’t think positively about the aftermarket, so they choose to give of benefits for underweight. It can be predicted that recently the market of PA6 will keep weak.

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