CPL & nylon 6 market confidence restored by heavier maintenance

CPL and nylon 6 market have experienced successive declines since late February and continued to face pressure through mid to late March. However, recent coordinated production cuts by caprolactam and nylon 6 plants have accelerated the market recovery from cyclical lows faster than anticipated.

From late March to the latest updates, price-protection measures through output reductions persisted across the nylon raw material sector with synchronized adjustments in both CPL and nylon 6 chip factories.

During the week of March 24-30, quantitative changes from the maintenance have evolved into qualitative shifts as inventory destocking progressed across the chain.

Beyond previously announced maintenance plans, companies including Lunan Chemical, Juhua, Lanhua Sci-tech, Yangmei, and Sanning also have implemented production cuts or temporary halts.

CPL output reductions stemmed from dual pressures: sustained operational losses and efforts to prevent inventory buildup. With downstream plants also scheduling maintenance, April contract and spot demand are projected to decline variably. Producers opt to curb output both to avoid inventory accumulation and prevent excess supply from intensifying spot market competition.

CPL price stabilization has emerged as a prerequisite for broader industry stabilization, while chip inventory levels determined whether the sector could fully escape low-price conditions and initiate an upward trajectory. Although inventory pressure persisted through the week, marked improvements became evident.

Over the weekend (Mar 22-23) and on Monday (Mar 24), integrated polyamide plants have significantly boosted sales volumes. Several chip producers reported transactions exceeding 10,000 tons, substantially easing inventory pressure. Alongside improved sales, production discipline remain widespread. Following earlier shutdowns at facilities including Yongtong, Changde, Juheshun Shandong, Lubao, and Hongsheng, a new round of output cut is scheduled to commence between late March and early April.

Based on current operating rate projections, CPL plants' run rate would decline to approximately 85% from late March through early April, with nylon 6 plants' run rate falling to around 80%, the lowest levels since early 2024.

As production cuts materialized, inventory issues are expected to further ease. Should prices stabilize from late March onward, downstream concerns about price declines in April would likely diminish. With sustained supply reductions, the procurement strategies will transition from inventory suppression to normalized purchasing rhythms, and inventory digestion could accelerate beyond prior expectations, potentially resolving fundamentally within April.

At that stage, considering historically low absolute prices, approaching seasonal summer demand, improving export conditions, and ongoing maintenance plans, a rebound in Q2 appears increasingly probable.