Nylon 6 DTY exports maintain a strong momentum

More than half of the year has passed, and recently, there has been a seasonal weakening trend in nylon filament demand. For example, FDY related sun protection, and FDY and DTY related feather yarn have gradually shown signs of weakening. The imbalance between production and sales in filament plants is a common phenomenon, but currently, there is not significant pressure due to low inventory levels. Comparatively, in the past six months, DTY has performed slightly better than FDY overall. This is influenced by factors such as new FDY production facilities surpassing DTY since last year and steady China domestic demand. While FDY demand growth has slowed down after surging last year, DTY domestic demand continues to grow steadily, especially in high-end applications. Additionally, the strong growth trend in DTY exports over the past two years is one of the main reasons driving the gap between demand and FDY.

1. Nylon DTY export growth outpaces domestic demand growth

In May, the monthly export volume of nylon DTY exceeded 13,000 tons from China, reaching a historical high for a single month with a nearly 50% year-on-year increase. Looking at the monthly export volume changes in recent years, nylon 6 DTY exports have shown a significant upward trend since the end of 2022.

Compared with past data, when examining cumulative export volumes from January to May, with the acceleration of China domestic production of nylon 6 DTY starting from 2016-2017, export volumes have increased year by year, except for a temporary decline in 2020 due to the pandemic. In 2024, there is a clear acceleration in DTY export volume growth, with a year-on-year increase rate as high as 25%, significantly surpassing the growth rates in the same period of 2022 and 2023. The demand growth rate for 2024 is expected to be around 13%, and based on the export momentum from January to May, this year's DTY export demand growth is expected to be significantly higher than domestic demand growth, with export demand likely to account for over 10% of the total DTY demand.

2. Brazil and Turkey are the main regions driving nylon 6 DTY export growth

China's export growth of nylon 6 DTY this year is considerable, primarily driven by notable increases in exports to Brazil and Turkey. While exports to Brazil did not show significant growth in the previous three years, they have stood out this year, with Huading remaining a major supplier to Brazil due to anti-dumping effects. On the other hand, DTY exports to Turkey have shown very stable growth, with the proportion of nylon DTY exported to Turkey increasing from 10% in 2021 to 20% in 2024.

Furthermore, similar to Brazil, Vietnam has also shown significant growth this year, compensating for the slow growth of the previous two years. Their share of nylon 6 DTY total exports is 26% and 6.7%, respectively, approaching the levels seen in 2021.

3. Replacement factors

The steady growth in Chinese exports of nylon 6 DTY to Turkey has doubled their share of total exports in three years, resulting in a threefold increase in export volume. The proportion of nylon 6 DTY imports from Chinese mainland to Turkey has increased from 49% in 2021 to 81% in 2023, with further growth expected this year. However, Turkey's overall growth in nylon 6 DTY imports has declined from 20% in 2022 to 2% in 2023. This indicates a weaker growth trend in Turkey's nylon 6 DTY imports, with Chinese mainland rapidly replacing other import sources.

Moreover, looking at the export destinations of Chinese polyester filament, the growth of Chinese exports of polyester DTY to Turkey was strong in 2023 but has since declined, mainly due to poor local orders in Turkey and reduced competitiveness in the global market. Some weaving companies have upgraded their products by shifting from polyester to nylon, which could favor an increase in import demand, although this substitution is currently limited.

Conclusion

Based on this year's export data, nylon 6 DTY exports continue to exhibit a strong growth trend. Major industry players, with their comprehensive foreign trade teams, have become the main suppliers driving the increase in DTY exports from Chinese mainland. For some filament plants, DTY exports account for as high as 50% of their output.

While DTY exports increased by 25% year-on-year from January to May, exports of POY, FDY and HOY (non-elastic nylon 6 filament) decreased by 2.5%. This contrast supports the overall better performance of DTY compared to FDY in 2024.

However, there are signs of weakening export orders for DTY in recent times. With Turkey relying on Chinese mainland for over 80% of its nylon DTY imports and overall demand growth remaining low, the potential for further export growth of nylon DTY from Chinese mainland to Turkey may slow down. The growth situation in Vietnam warrants attention, but due to anti-dumping effects, most filament plants in Brazil have limited opportunities for export growth. Overall, in the second half of this year or next year, the growth in nylon DTY exports may gradually slow down.