Nylon Tire Yarn Prices Show a Sign of Recovery in September, Headwinds from August Persists

Nylon Tire Yarn prices (NTY) prices moderately moved up by 1% in the given first half of September due to moderate demand before NE Asia goes for autumn holidays. The headwinds from August persists as Indian markets remained relatively subdued. The drop in NTY prices recorded in Indian markets remained significant, 2.4% month over month in August, have not been able to recover the previous levels for NTY. Spreads for imports have been increasing across the markets in APAC as oversupply and easing of demand continues partially due to credit situation and partially due to floodings and typhoons hitting China, Korea and parts of SE Asia. NTY markets, which serve as a major constituent of end-use automotive sales, however, have been facing headwinds comprising of lower demand, higher lead times and high input cost.

From supply perspective, the prices of Caprolactam dropped in August due to lowering of contract prices as the markets remained well fed. Weak Caprolactam spot prices eased cost pressure on NTY feedstock, caprolactam spot prices dropped 7.4% in the beginning of August and carried till the first half of September. NTY upstream market of cyclohexane spot prices hit rock bottom by the end of August, hitting as low as FOB Shanghai USD 1110/MT, a drop of 10% MoM basis, while it recovered marginally. On the other hand, energy prices, especially gas as well as crude prices remained lower than July. Autumn festivities in the coming month to further weigh on production side of NTY in APAC as labor market tightens.

From demand perspective for NTY, prices, which the suppliers felt of easing to gain volumes in otherwise slowing market. The slowdown in automotive sales and production throughout APAC remained a major headwind which kept the inventory levels moving up even in September, although at a slower pace. As per the market intelligence, Korea observed 4.3% drop in sales, Japan observed 3.5% drop in sales. On an average, 4% drop in car sales resulted in a price fall of 2% to 4% in spot NTY prices across the East. India’s latest update on NTY imports showed 1.3% YTD drop in imports of NTY, largely driven by slowing demand for cars as rural demand has not been picking up as high interest rate now weighs on consumer sentiment. India’s chemical sector Producer price index dropped by 0.2% again, while the pace eased this month. NTY imports from both Russia and China, though increased in August 2024, the domestic supply of India saw downturns due to higher rainfall and logistical incapacities. Production remained positive while sales declined for NTY. A market participant revealed that queries for NTY across APAC markets have been largely for October November bound deliveries, as festivities across the NE Asian as well as overseas markets to keep business confidence up. Suppliers have been not running NTY production at optimum capacities, a Chinese market participant revealed.

NTY has been forecast by ChemAnalyst to see a bullish trend in September driven largely by supply crunch as Chinese and Korean markets to go offline due to autumn festivities. The Indian markets may observe higher price revisions for NTY as seasonality weakens, domestic supply coming online and cheaper Chinese as well as Russian imports drop.