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SunSirs: The Factory Lowers the Load To Offset the Negative, PA66 Adjusts Slightly in July

August 04 2020 09:19:24     SunSirs (Joyce)

Price Trend

According to the data monitored by SunSirs, July China PA66 market is mainly in stability with little changes, and the range of ever grade is narrow. UP to July 31, of PA66, SINOHESIVE’s injection modeling offers the mainstream average price at 18,800 RMB/ton, which has a decrease of 0.53% than the average price at the beginning of this month.

Adipic acid, the PA66 upstream, July market condition continues the trend of last month. Market condition is stable, and the spot price adjusted slightly in the whole month. According to data from SunSirs, the price of adipic acid falls slightly in July, but the decline was only 1.78% throughout the month. Dealers' quotations are mixed, mostly fluctuating in the range of 100-200 RMB/ton. As of July 31, the mainstream quotations of adipic acid in East China were generally 6,500-6,800 RMB/ton. On the cost side, crude oil continues to consolidate at the $40 mark, and its impact on the downstream gradually weakens. The direct upstream product of adipic acid, pure benzene, rebounds significantly in July, but mainly concentrated at the end of the month. Due to the hysteresis of cost transmission, the downstream adipic acid currently doesn’t follow the rise. Moreover, the pure benzene is still at a relatively low level, which has not brought fundamental benefits to adipic acid. On the contrary, rising costs have squeezed downstream profit margins. As for the supply, July operating rate is still in a high level, basically over 80%. The supply of source is relatively sufficient, so the burden of inventory is significantly high for manufacturers, and the shipment behaves badly. At present, most traders have recovered the normal purchase, but the downstream demand is influenced by domestic weakness and overseas pandemic. And thus, the dealers are still cautious about purchasing the products, and part of them purchase by order, mainly operating in a light inventory. At present, the weak market of adipic acid is mainly affected by the supply and demand level, and weak demand is still the main reason for the current situation of adipic acid to get out of the haze. In terms of the future market, SunSirs believes that the current oil price fluctuates within a narrow range, and pure benzene is hovering at a low level, so the cost has not changed significantly. The recovery of the chemical industry has also been suppressed to a certain extent, and the fundamentals are mainly bearish. More importantly, there is still no positive indication in terms of demand. It is expected that under the background of the current sluggish supply and demand, it is still difficult to see a breakthrough market in the near future.

The upstream adipic acid generally supports the cost of PA66 recently. Last month, the shortage of PA66 spot circulation and the weakening of the supply sustained the spot price. In July, the spot supply has partially improved, but the market supply is still at a low level. It’s reported that this month the operating rate of China slicing factories is still functioning with low load. Among them, Liaoyang XJ ceases production, Hua Feng only operates half, Dandong Eco-Nylon also has half shut down, and SHENMA is relatively high at 80%. At the same time, the side reflects the lack of confidence in the future market, with a low operating rate to divert oversupply pressure, to stabilize the PA66 spot price. July PA66 quote narrow swings, but the merchants shipping resistance is still, so the actual delivery is still less. Downstream factories purchases are more fragmented, taking when needing to use, and high-priced goods are more resistant, so the degree of transaction improvement is limited.

SunSirs analysts believe that: July China PA66 market adjusts with narrow volatility. Upstream adipic acid spot price is under low operation, so PA66 cost surface support is weak. Downstream demand is weak, following up slowly, and resistant to high-priced goods. China slicing plants control operating rate to decompress the supply excess pressure. At present, that the current supply is less and the actual delivery is less situation coexists, reflecting the domestic market is actually in the post-supply and demand contradictions. It is expected in the short term PA66 market may continue to run smoothly.

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