Modified plastic plants pre-holiday restock almost ended

January is coming to an end, and most modified plastic factories are making preparations for holidays and pre-holiday stocking.

Based on the stocking pace, most purchases of modified plastics by the factories were concentrated in mid and late Jan. Currently, based on the feedback from the polymer end, downstream stocking is also coming to a close. During the continuous increase in benzene prices in Jan 15-19, there was a concentrated trading of nylon 6 chip. However, in the week of Jan 22-26, the purchases mainly focused on necessary replenishment. It was first because that some modified plastic factories reduced raw material stocking due to the pressure of accumulated goods inventory. Second, downstream buyers were cautious about the current high prices of chips, especially after the increase in benzene prices.

However, looking at the expected post-holiday prices, the outlook for nylon 6 chip is not weak. First, benzene prices are relatively strong, with a supply reduction of 100,000 tons expected in February. Although downstream production of styrene and phenol ketone is not expected to be reduced during the Spring Festival period, the supply-demand structure is expected to be strong in the first quarter. Second, CPL (caprolactam) and polymerization have high operating rates and low inventories. CPL plants are expected to operate at full capacity, and there are many pre-sales orders for polymerization. Currently, factories are trying to exchange quantity for price to ensure the run rate during the Spring Festival. Therefore, there is a high probability of upward movement for chips after the Spring Festival. Our conservative assessment of the post-holiday chip cost is as follows: benzene (7500-8000) + CPL-benzene spread (5500-6000) + chip processing spread (800-900) = chip price (13800-14900yuan/mt), so the current e-works price of 14000-14600yuan/mt (freight is approximately 250-350yuan/mt) is still reasonable, and if the price increase after the Spring Festival is taken into consideration, the current price is relatively safe.

The stocking of nylon 66 chip is relatively ordinary, which is related to the overall weakness of nylon 66 market since 2023. However, considering the varying degrees of shortages in mainstream factory supplies, the atmosphere for pre-holiday purchasing is still acceptable. However, the main factor behind the temporary price increase in mid-December was the cost support of adipic acid. Downstream demand for the post-Spring Festival period remains conservative, so there is not much stocking. However, looking at the current changes in the cost of chip, the settlement for adipic acid in January is expected to increase by 600-800yuan/mt, with HMDA remaining stable, while the average price of CHIP in January has only increased by about 300yuan/mt, slightly weaker than the raw materials.

The holiday schedule for modified plastic factories is similar to previous years, concentrated between January 25th and February 5th according to the market survey. The difference in timing is related to the injection molding application. Downstream demand for automotive parts is relatively better, so some customers' modified plastic factories will postpone their holidays. First, factories related to electronics, electrical appliances, and power tools tend to have an earlier holiday period. Second, the timing of holidays is also related to the size of the factories. Generally, small factories will have their holidays before January 25th, while medium-sized factories will have their holidays in early February. Only a few large modified plastic factories will continue normal operation until the eve of the Spring Festival. Essentially, the timing of holidays is directly related to the factory's order status and finished goods inventory. From the current understanding, large factories are still receiving stable orders before the holiday, so they are maintaining stable production. However, most small and medium-sized factories are not optimistic about the post-holiday demand. Especially for products with a certain accumulated inventory, they are not in a rush to stock up before the holiday.

Finally, the post-holiday work schedule for modified plastic factories is generally divided into two categories. One category follows the statutory holidays and resumes work and production between February 18th (the ninth day of the Lunar New Year) and February 20th (the eleventh day of the Lunar New Year). The other category resumes work gradually after February 24th (the fifteenth day of the Lunar New Year). Currently, the mainstream stocking inventory will be mostly used up by the end of February, so the demand for replenishment is expected to concentrate after March.