Quarterly update on Global Nylon Filament Yarn (NFY) Market
For the Quarter Ending June 2021
Supply of Nylon Filament Yarn (NFY) in the North American region improved over the previous quarter but limited availability of the upstream commodities such as Benzene, Caprolactam and Adipic Acid induced production lags in the regional NFY market. With the restoration of the industrial infrastructure in the US Gulf coast, the demand outlook seemed to surpass the overall supply trends. Mass vaccination programmes supported the public movement as well as improved market activities which resulted in improved performance of the textile sector. As a ripple effect of the shortage in the domestic market, the prices of Nylon Filament Yarn (NFY) remained firm in the North American market.
During the second quarter of 2021, Nylon Filament Yarn supplies (NFY) in the Asia pacific region were reduced by significant percentage as buyers were reluctant to procure the high-cost feedstock Caprolactam amidst rising inflation rate in Chinese domestic market. The NFY short supply situation was exacerbated in June due restricted production rates amidst power cutbacks. Demand picked up with lift in travel restrictions except in India where demand slowed due to reduced offtakes from the downstream textile industries. NFY price in India stabilized with Ex-Works Mumbai prices assessing at USD 4161 per tonne in June. As per Chinese traders, export demand for Nylon resins from most of the downstream companies was high due to prevailing supply shortage from the key producers in the US.
The European Nylon Filament Yarn (NFY) market continued to remain constrained in terms of supply as the region faced shortages in the availability of the upstream commodities, which forced several manufacturing units to announce the force majeure in the NFY plants in second quarter of 2021. Feedstock Caprolactam availability continued to remain constrained due to two maintenance turnarounds between May and June. NFY demand remained continuously buoyed by improved public movement which proportionally surged the market activities in the several parts of the region owing to the mass vaccination programmes. Enquiries and offtakes improved from the downstream textile industries, thereby pushing up the price trend in Q2.
For the Quarter Ending March 2021
During the first quarter of 2021, Nylon supplies remained tight, as the several producers remained shutdown, due to the extreme freeze weather conditions in the US gulf region. Due to storm-led disruptions in the Gulf region, the feedstock Caprolactam prices surged which proportionally surged the prices of Nylon Filament Yarn (NFY). Dented supply chains pushed up the regional NFY offers by a significant percentage while the demand remained healthy as the consumption from the downstream automotive, construction and textile sector surged with improved manufacturing.
NFY supplies in the Asia-Pacific region were constrained, as the several plants remained shut in China on account of Lunar New Year holidays. The feedstock supply tightened followed by decline in Caprolactam imports from Europe. Feedstock caprolactam was heard trading at uplifted rates, tracing price of feedstock Benzene and tighter global supply. NFY registered fresh hikes during the quarter due to escalating Caprolactam rates and reduced inventory levels. Southeast Asian traders announced positive price adjustment in response to the rise in Europe-based Capro costs. Tight supplies led to surge spot prices of Nylon Filament Yarn (NFY) in India with the prices in March crossing USD 4000 per tonne levels during the month.
NFY supplies were balanced to tight, in the European region during Q1-2021, as the major plant were on a force majeure and restarted the production in the second half of first quarter, which led to the shortage of both Nylon chips and yarns. The demand surged from the textile industries as the consumption from the downstream textiles surged. Concerns over surging freight and supply shortage increased the prices of NFY in the European market.
For Quarter ending December 2020
The Asian textile market was booming in the final quarter of 2020 due to a significant drop observed in COVID-19 cases and sharp pick-up in industrial activities. Bangladesh, Asia’s second largest textile exporting country reported optimum textile production levels despite headwinds due to the pandemic and maintained the steady industrial growth till the end of December. Buoyed by recovering trade, India experienced a significant growth in its overall textile exports by around 6.3% in October 2020 compared to the previous year. Furthermore, festive season showed some further growth in the Indian textile industry in November that induced a direct impact on the demand of NFY. The Indian NFY industry witnessed increase in prices with soaring feedstock Caprolactam and tighter global supply as the key producer’s concerns. Ex-Depot price for NFY 40/24D grade was assessed around USD 3340 per MT in India during the first half of December.
Supply of Nylon 6 in the final quarter of 2020 in Europe remained significantly low because of force majeures declared by LANXESS, the largest manufacturer of feedstock Caprolactam in Europe in the October-end. The shortage of feedstock directly impacted producers’ margins compelling them to increase prices of NFY in the mid of the fourth quarter of 2020. Due to the second wave of COVID-19 infections faced by many European countries, the demand for NFY from the automotive sector showed a significant decline by 13.5% in November, on a year-on-year basis.
Market sentiments of Nylon filament yarn (NFY) remained in a narrow range in the final quarter of 2020, as US’ imports of NFY significantly decreased from around 1075 tonnes in October to nearly 992 tonnes in December 2020 with China standing on the top among exporters in Q4 2020 although the figure remained relatively pressured over the previous year due to the US-China trade war. Towards the end of the quarter, textile market across the US improved significantly although the overall demand fundamentals are yet to pave normalcy.