1. Nylon prices had already entered a low range with significant volatility
Since the Spring Festival, CPL spot prices briefly rose before plunging rapidly, accumulating a decline exceeding 1,400yuan/mt since mid-February. Nylon chip and filament price indices also dropped by over 1,000yuan/mt, with some supply sources seeing steeper declines of 1,500yuan/mt or more. By this point, nylon industry chain prices had fallen to their lowest levels since late 2020.
The processing fees for CPL and chips had generally compressed to relatively low levels, and that of textile filament of multiple specifications also gradually declined. However, substantial discrepancies persisted between contract and spot prices for high-speed spinning (HS) chips, along with significant price variations between new and old factory filament supplies, creating overall market confusion. In summary, the main nylon price trend had settled into a low range. Considering recent continuous production cuts and maintenance announcements from CPL and polymerization plants, the downward space for short-term nylon prices appeared limited.
2. Downstream buyers showed limited enthusiasm for low-price procurement
Despite prices reaching relatively low levels, downstream buyers remained cautious about bargain-hunting. For chips, the primary issue involved high inventory levels constraining market expectations for future price increases. Fabric manufacturers similarly maintained prudent purchasing strategies for nylon filament due to multiple factors:
(1) Many fabric factories had unsuccessfully attempted to "buy the dip" multiple times during October-December 2022, ending up with mid-level pricing. The post-Spring Festival 2023 price rally followed by repeated downward breakouts had numbed manufacturers to raw material trends, eroding short-term confidence in identifying market bottoms.
(2) Massive fabric equipment expansions in 2022 created supply growth outpacing demand, leaving substantial finished product inventories carried over from late 2022. Manufacturers still holding excess inventory prioritized inventory reduction, risk mitigation, and capital recovery in 2023 operations.
(3) Weak export orders and insufficient domestic demand fostered pessimistic market outlooks, reducing urgency for feedstock procurement.
3. NFY plants struggled with inventory reduction while maintaining production
These factors collectively suppressed fabric manufacturers' stocking enthusiasm, leading to continuous inventory accumulation at filament plants since the Spring Festival. Although March saw slower inventory growth as fabric factories resumed operations and consumed existing stocks, several factors limited improvement: some fabric plants operated below 2022 capacity levels, new filament capacity continued entering the market amid high operating rates, and rigid demand consumption proved insufficient to drive inventory reduction.
However, most filament manufacturers faced limited pressure to cut production due to multiple factors: current low raw material costs minimized inventory depreciation risks, manageable inventory levels within financial tolerance, tight skilled labor availability, and relatively low production costs.
While substantial maintenance announcements emerged in upstream sectors, inventory reduction required time. With fabric manufacturers facing order shortages, the nylon filament market remained dominated by rigid demand negotiations, and filament plant inventories continued rising. Even if April brought upstream inventory reductions or benzene market improvements potentially triggering bottoming prices, the approaching traditional fabric industry off-season without substantial order support would likely limit any price-driven procurement increases. Significant inventory reduction through demand recovery or raw material price hikes appeared challenging. Over time, some filament plants facing particularly high inventory pressure might implement appropriate production cuts during the off-season.
