Nylon 66 suppliers to cut Apr production to stabilize prices

Nylon 66 market remained generally stable throughout the first quarter of 2025. Before the Spring Festival holiday, due to low-price promotions, downstream buyers restocked intensively, and sellers achieved good pre-sales. As a result, for a considerable period after the holiday, chip suppliers were busy fulfilling orders. Even though new orders were limited, chip suppliers maintained relatively firm offers, supported by low inventory levels. Additionally, after the holiday, upstream HMDA suppliers raised their offers. Although transactions faced resistance, this provided some psychological support to the chip segment.

However, as downstream buyers had ample stock, the post-holiday market conditions were relatively weak. The overall decline in commodity prices further delayed downstream procurement. A wait-and-see approach and just-in-demand purchasing dominated market trading, and as new order faced pressure, inventory pressure on sellers gradually increased.

From the cost perspective of upstream HMDA, from early February to late March, except for the rise in liquid ammonia prices, the prices of other key raw materials-butadiene, caprolactam, and adipic acid-plummeted significantly. Therefore, both HMDA production costs and adipic acid monomer prices experienced substantial declines.

Although the downward trend in HMDA costs was clear, the latest contract offers from major suppliers remained firm. Spot offers also held steady at 19,500yuan/mt with no immediate adjustments.

However, due to inventory and shipment pressures, nylon 66 chip prices actually saw a significant drop in March 2025. Taking Shenma's EPR27 as an example, prices were adjusted twice in mid- and late March, with a cumulative decrease of 700yuan/mt. Other major grades saw similar reductions, generally ranging between 500-700yuan/mt.

Regarding the monthly average prices, butadiene prices in January and February were similar, but March saw a sharper decline. Although HMDA contract offers remained stable in April, there was a possibility of a reduction in May. Notably, HMDA produced via the CPL route was now cheaper than the butadiene route, and the cost gap had widened, which could pressure mainstream butadiene-route suppliers in pricing. Fortunately, Yangnong Ruitai had maintenance plans in April, so prices were likely to stay firm given manageable production and sales pressures.

Despite cost declines in the upstream HMDA segment, firm offers meant that the nylon 66 polymerization segment faced relatively greater pressure. Caught between upstream and downstream pressures, chip producers opted for production cuts in April to stabilize prices.

As shown in the figure above, major nylon 66 suppliers, including Invista and Shenma, had maintenance and production reduction plans in April. Based on these arrangements, the industry's operating rate was expected to drop to around 40%-a historically low level in recent years. However, it remained to be seen whether these cuts would be fully implemented.

In summary, the nylon 66 industry continues to face pressure in the second quarter. Although upstream costs have declined, chip producers and downstream buyers did not directly benefit. Chip factories adapt by initiating a new round of production cuts, simultaneously reducing inventory and pressuring upstream suppliers. As a result, profit margins within the supply chain might gradually shift toward the chip segment.