Several Factors Drove Nylon 66 Chip Price    

By China Engineering Plastics Association


Since the second half of 2009, an abnormal price change has emerged in China's nylon 66 chip market. The material has been in short supply, so its price has risen. As nylon 66 chip is one of the five major general-purpose engineering plastics, its market fluctuation has caused widespread concern in the industry.
   China Engineering Plastics Association recently investigated this market fluctuation and analyzed its reasons in a report.


1. The economic growth pushed up nylon 66 chip prices

With the implementation of China's economic stimulus policy and related industries' stimulus and adjustment programs, the pulling effect of investment on the economic growth was gradually becoming obvious from the second quarter of 2009. China's GDP growth rate increased from 6.1% in the first quarter of 2009 to 8.9% in the third quarter. The output growth of automobiles and other products that incorporate a large amount of engineering plastics even exceeded 30%. As the market demand was gradually strengthening, nylon 66 chip prices increased. The fluctuation of nylon 66 chip prices was in line with the domestic macro-economic situation and the price fluctuations of related raw materials. Its price growth was even slower than those of other products.

2. The closure of nylon 66 chip factories in other countries caused the hike of nylon 66 chip prices

Due to the financial crisis, since the fourth quarter of 2008, many nylon 66 chip and intermediates producers in other countries have reduced their operating rates or closed their production lines. In July 2009, mainly due to a shortage of butadiene as well as equipment failures, Invista announced force majeure on its production of adiponitrile, hexamethylene diamine, nylon 66 salt and nylon 66 polymer worldwide. In December 2009, the French Rhodia's adipic acid plant staged a 2-day strike, directly pushing up the prices of adipic acid and hexamethylene diamine, both of that are raw materials of nylon. As the overall operating rate of the nylon 66 industrial chain was low, the global supply of nylon 66 reduced, driving up the price of nylon 66 chips.

3. The price rise of imported goods boosts nylon 66 chip prices

In early 2009, the import price of general-purpose nylon 66 chips was about US$2 200/t in China. It was even lower than the selling price of domestically made nylon 66 chips. Since the second half of 2009, foreign manufacturers have constantly increased the prices of their products in the Chinese market. In December 2009, the price of imported nylon 66 chips in China was about US$3 200/t, rising by more than 45% from early 2009. The price growth of imported nylon 66 chips was more than that of China-made nylon 66 chips, and their prices were also higher than those of similar domestic products. This pushed up the price of domestic nylon 66 chips to a certain extent.

Prices of chemicals related to nylon in China in 2009                                           
(RMB/t)
Materials       in January    in June    in December    Growth throughout the year
Benzene         3 050       5 800      7 200       136%
Adipic acid     7 000       12 000    14 200      103%
Caprolactam     10 000      15 400    18 000      80%
Nylon 6 chip    13 000      17 500    20 000      54%
Nylon 66 chip    19 700      19 200    26 800      36%
Source: CNCIC


4. The price fluctuation of Chinese nylon 66 chips has little to do with anti-dumping measures

The anti-dumping of nylon 66 chips affected the domestic market to a certain extent, but the decisive factor was the relationship between the market supply and demand of nylon 66 chips and the industrial development conditions. Anti-dumping has not affected the processing trades that are denominated by US dollars. In fact, the US dollar-denominated nylon 66 chips were in short supply. A few international companies that have the ability to produce nylon 66 chips also procured nylon 66 chips in China to meet the needs of their downstream processing. Because the total supply and demand situation of the nylon 66 chip was very tight, its price rise was inevitable.

5. The rising price will slow down

The price of nylon 66 chips is now high, and high prices will curb demand, so there is not much room for further price increases. With the increase of the nylon 66 chip supply in first quarter of 2010, the price fluctuation of nylon 66 chips will abate.