[PA66 Daily Review] Crude Oil Slump Weighs on Costs, Weak Demand Drags Market Lower

I. Today's Summary

1. International oil prices weakened significantly. The easing of tensions between the United States and Iran alleviated concerns over supply, leading to a collective decline in both domestic and overseas crude oil futures. The overall cost environment for the chemical sector weakened, exerting bearish pressure on the polymer market.

2. Domestic PA66 spot prices were generally lowered, with the price focus of engineering plastics-grade chips continuing to move downward. Weakness on the raw material side, coupled with sluggish demand, led to thin market trading.

3. Industry operating rates remained stable. Today, the PA66 capacity utilization rate was 60%, with relatively ample supply. Downstream buyers were cautious about purchasing at high prices, and the supply-demand tug-of-war was weak. Inventory pressure on manufacturers gradually emerged.

4. Feedstock news is mixed. Invista’s increase in HMD quotations provides bottom support, but spot adipic acid prices have fallen, limiting overall cost support.

II. Spot Market Overview

The spot price center of gravity has retreated.

Today, the domestic PA66 market continued its weak downward trend, with mainstream grades generally seeing price cuts. The quoted price for engineering plastic-grade chips nationwide fell from RMB 20,000/ton to RMB 19,500/ton, down RMB 500/ton in a single day. In Yuyao, spot engineering plastic-grade chips dropped from RMB 19,500/ton to RMB 19,250/ton, down RMB 250/ton. Overall market negotiations moved down to RMB 19,000–21,000/ton.

Market trading was generally subdued today, with fundamentals remaining weak. Raw material costs continued to ease, and some producers proactively lowered prices to stimulate sales. Downstream end-users are in the off-season for demand and show strong resistance to high-priced chips, entering the market only for essential procurement with no large-scale restocking activity. Traders remained cautious, offering concessions and selling in line with the market. High-priced goods faced difficulty in closing deals, and overall spot trading follow-through was sluggish.

(ii) Upstream raw material trends are diverging.

Cost-side factors are mixed, with overall support relatively weak. International crude oil prices fell sharply, with NYMEX crude, ICE Brent, and INE crude oil futures all plunging across the board. The overall cost sentiment for chemical products weakened, weighing on the polymer market. The raw material adipic acid continued to decline, with mainstream prices in East China down by RMB 100/ton to RMB 7,600–7,800/ton. Cargo holders followed the market lower to sell, while downstream buyers maintained a strong wait-and-see attitude.

On the positive side, Invista implemented new HMD prices starting June 1, with spot prices raised to RMB 26,300/mt. Firm pricing support from the high-end upstream feedstock side has, to some extent, limited the room for a sharp decline in PA66 prices.

III. Production Dynamics

Today, the capacity utilization rate of domestic PA66 polymerization enterprises remains at 60%, with the industry's operating load relatively stable and short-term supply of goods abundant. Although there are long-term expectations of supply contraction in the industry, the current operation of facilities is stable, with no concentrated maintenance or load reduction actions, leading to ample market supply.

In terms of profits and inventory, the overall PA66 industry is currently operating close to the cost line, with very slim profit margins, and manufacturers are not under significant pressure to dump goods at a loss. However, due to continued weak demand, downstream buyers have slowed their purchasing pace, leading to a gradual buildup of inventory pressure at factories, which is weighing on spot prices.

IV. Price Forecasting

1. Short-term market outlook

The domestic PA66 market is expected to continue tomorrow.Weak narrow-range consolidationThe overall pattern is weak, and the downward trend is difficult to reverse.

Bearish factors: The sharp drop in international crude oil prices has dragged down the overall cost center of the chemical sector, while adipic acid continues to weaken, resulting in insufficient raw material support; the off-season effect in end-user demand is evident, downstream buyers show weak acceptance of high prices, and market transactions struggle to gain momentum; industry operating rates remain stable, supply is ample, inventories are accumulating slowly, and fundamentals are bearish.

Bullish factors: INVISTA’s HMD price increase is underpinning the raw material floor; the industry is operating near the cost line, producers have limited willingness to cut prices sharply, and there is limited room for the market to decline significantly.

2. Price Range Forecast

In the short term, mainstream domestic engineering-grade PA66 chip prices are operating in the range of RMB 19,000–19,800/ton, with the market mainly characterized by demand-driven negotiations and weak consolidation.

3. Risk Warning

If crude oil rebounds and adipic acid stops falling and stabilizes, the market may see a short-term opportunity for a halt in declines and a recovery. If downstream demand remains sluggish and inventories continue to accumulate, prices may move lower. This analysis is only a fundamental-based projection and does not constitute trading or investment advice.