Trade Consultation Releases Positive Signals. Nylon Market Is Cautious.

Since 2018, Sino US economic and trade problems have been repeatedly affecting the commodity market. The nylon terminal industry has been subject to tariffs imposed by the United States on Chinese goods, resulting in the terminal export orders being sluggish, and the demand for nylon spinning in 2019 is depressed.

The United States will impose different duties on 550 billion US dollars of Chinese products, and the specific time and rate will be shown below.

Figure 1 tariffs on Chinese goods in the United States

The impact of Sino US economic and trade issues on the nylon industry:

The impact on terminal demand: in the nylon terminal industry in 2019, most of the demand for civilian filament industry is in a state of depression, which is related to Sino US tariff issues. The downstream of civilian filament is mainly clothing textiles. Most of the terminal textiles are included in the United States List of tariffs on Chinese products, resulting in a reduction in export orders for end users in 2019.

According to the latest data from the General Administration of customs, the export of textiles, yarns, fabrics and products in China in 2019 was 177 billion 465 million US dollars, down 2.49% from the same period last year. The total export volume of textiles, yarns, fabrics and articles increased by US $79 billion 419 million 200 thousand, an increase of 0.83% over the same period last year, and the cumulative export volume of garments and accessories in 2019 was 98 billion 66 million US dollars, down 5.04% from the same period last year.

Fig. 2 Comparison of textiles and garments export

The impact on the market mentality: Sino US economic and trade issues are the main concerns of the market. The progress of Sino US economic and trade consultations has great influence on the market mentality. During the early Sino US consultations, when the good signal was released, commodities basically rose. However, because the latter uncertainty is still relatively large, and most of the operators believe that the problem will be more durable, the market's response to news stimuli is becoming more and more dull.

Domestic policies are mainly oriented: the United States puts forward corresponding counter-measures to increase tariffs on Chinese goods, and domestic interest rate cuts and devaluation of the renminbi are conducive to the development of domestic enterprises, offset the partial impact of tariffs on enterprises.

From the perspective of the market trend of the nylon industry, Sino US economic and trade problems have a certain impact on the operation of the nylon industry, especially in terms of civilian spinning. The reduction of export market demand has led to the overall weakness of the high-speed spinning market this year. However, the downturn in the nylon Market in 2019 can not be completely attributed to the Sino US economic and trade problems, and the uneven development of its industrial structure is also one of the important factors.

In 2018, the production capacity of caprolactam in China was 3 million 790 thousand tons, and the production capacity of PA6 chips was about 4 million 40 thousand tons. In 2019, the production capacity of caprolactam in China increased from 250 thousand tons to 4 million 40 thousand tons, while in 2019, PA6 polymerization capacity increased by 1 million 50 thousand tons to 5 million 90 thousand tons. In the downstream industries, the growth in 2019 was limited due to the slowdown in macro-economic growth, the Sino US economic and trade frictions, and the cooling up of some hot demand in the early stage of domestic demand. This leads to the polymerization of cyclohexanone CPL-PA6 and the downstream capacity is olive shaped. Therefore, PA6 polymerization has become the most important link in the market.

Recently, some positive signals have been released from the market, and China and the United States will conduct the thirteenth round of high-level economic and trade consultations in October. However, judging from the current situation, Sino US economic and trade issues have certain inevitability and long-term characteristics. Therefore, the market does not anticipate the short-term solution.