A subtle shift is occurring in the industrial chain price signals. According to publicly available industry data, the benchmark price of Nylon DTY stood at 16,120 CNY/ton on July 28, up 1.77% from the beginning of the month. While this increase appears modest, its significance lies in the context of a wide fluctuation range of 13,560 to 18,960 CNY/ton over the past year: prices are slowly climbing from the bottom but remain far from the peak warning level.
Cost-Driven and Supply Contraction
The current price increase of Nylon DTY is essentially the result of combined cost-side and supply-side factors. Upstream raw material caprolactam prices have been rising steadily since the second quarter, directly increasing the polymerization cost of nylon chips. Concurrently, several major domestic nylon polymerization units entered their annual maintenance cycles in July, leading to a temporary tightening of nylon chip supply. The rise in chip prices quickly transmitted to the downstream texturing segment, significantly strengthening the cost support for Nylon DTY.
It is worth noting that this price increase is not a signal of a full demand recovery. Data on downstream weaving mill operating rates shows that water-jet looms and warp knitting machines in the Jiangsu-Zhejiang region are operating at around 70% capacity, with terminal orders mainly consisting of small, just-in-time orders. There is no indication of large-scale stockpiling. This suggests that the current price rise is more of a 'passive follow-up' rather than an 'active push'.
Industrial Cluster Reactions and Procurement Strategy Divergence
Faced with continuous pressure from raw material costs, companies of different scales have adopted distinctly different strategies. In major nylon clusters such as Changle in Fujian and Yiwu in Zhejiang, large texturing mills, leveraging long-term contracts and inventory advantages, can absorb cost increases to a certain extent and adjust their quotations more slowly. In contrast, small and medium-sized texturing mills face greater financial pressure and have to increase their DTY ex-factory prices in line with the market. However, downstream customers have limited acceptance of these increases, leading to delays or reductions in some orders.
From the procurement side, fabric traders and weaving mills are adopting a cautious approach. Some companies engaged in a round of replenishment in late June to early July in anticipation of rising raw material prices. However, the current price of 16,120 CNY/ton is approaching their psychological ceiling. Most buyers are opting for on-demand, fast-in-fast-out procurement to avoid inventory depreciation risks from price fluctuations.
Divergence in Domestic and Foreign Trade Markets
The performance of Nylon DTY in domestic and foreign trade markets shows a clear divergence. On the domestic front, orders for sportswear and down jacket fabrics have entered the off-season in summer, reducing nylon consumption. However, orders for functional outdoor apparel remain stable, sustaining demand for high-end Nylon 66 and differentiated DTY products. On the export side, affected by volatile ocean freight rates and slow inventory destocking in some overseas markets, direct exports of Nylon DTY have slightly declined year-on-year. However, the indirect export channel through fabrics and garments remains unobstructed.
This divergence implies that the model of relying solely on high-volume conventional products in the domestic market is facing challenges. Texturing mills with differentiated product development capabilities and direct access to overseas end customers hold stronger bargaining power in price negotiations.
Profit Rebalancing and Market Outlook
The current profit distribution along the industrial chain is undergoing a round of rebalancing. In this cost-push price increase, the profits of the upstream caprolactam and chip segments have recovered first, while the processing margins of the Nylon DTY texturing segment are being squeezed. According to industry estimates, the processing spread for conventional Nylon DTY at the end of July has narrowed by approximately 200-300 CNY/ton compared to June. If raw material prices continue to rise without synchronized terminal demand, the profitability of texturing mills will deteriorate further.
Looking ahead, Nylon DTY prices are likely to maintain a high-level fluctuation in the short term. On the one hand, the caprolactam plant maintenance season is not yet over, so cost support will not disappear in the short term. On the other hand, the stocking period for the traditional peak textile season in August-September is approaching, offering potential for marginal demand improvement. However, the upside potential depends on the actual realization of terminal orders. If demand falls short of expectations, prices face a downside risk.