China Fibers and Textiles Sep.2016 | Page 2

To avoid risks rationaly helps NFY price edge up

Supported by the 11,900yuan/mt of Sep caprolactam (CPL) nomination from Sinopec, nylon 6 high speed (HS) chip sellers continue to push up chip prices. Being always unsmooth to follow up, can nylon 6 filament yarn (NFY) prices continue moving up?

Control production, reduce inventory and purchase rationally

to avoid risk

As downstream replenished intensively since end-Jul, NFY plant inventory began to reduce. Along with the shutdown expectation for G20 and rising NFY price, downstream plants continued to buy goods before logistics were halted. The overall inventory had dropped to a yearly low.

In terms of plant operation, as NFY plants in Hangzhou all halted operation before Aug 24, the plant operating rate dropped sharply to 55%, while plants in other regions ran stably and only a few adjusted several production lines slightly. Therefore, the overall inventory had slipped a bit.

In face of firming up feedstock, the

previous panic in NFY plants has gradually disappeared, and most plants expect the feedstock price to increase limitedly and will purchase on need-to basis.

This rational control of O/R, inventory and feedstock purchasing from NFY plants actually reduce their own risks, and many pressures also get released.

Some benefits to come

1. Reduction of inventory

Owing to the rational judgment, NFY plants reduce inventory under high-priced feedstock, which lowers the deficit risks in the future when the market turns down. Besides, the digestion of inventory also takes up less capital in NFY plants.