Nylon Tire Yarn Prices Increase in APAC Amidst High Freight Charges

Shanghai (China): Nylon Tire Yarn (NTY) prices have risen sharply in May 2024 as freight disruptions intensified across major markets in APAC and the Far Eastern regions. Prices rose by USD 65-75/MT compared to April 2024, according to ChemAnalyst assessments. Despite this increase, volume growth was observed in China, Japan, and Malaysia in May. However, Indian markets experienced a reversal in volume gains due to high inventory stocks. ChemAnalyst highlights a significant shift observed in the NTY markets in APAC.

NTY prices in the Asia Pacific region remained largely stable in April, a trend that began in late March 2024 due to higher Nylon 66 prices and strong demand in the Chinese market, which squeezed supply. The increased demand in China post-Labor Day holidays led to higher NTY export prices quoted in May. NTY prices surged due to rising end-use demand from downstream tire industries as global consumer demand gradually recovered. This is reflected in the tire output reported by Chinese markets for May 2024. Original equipment demand in the Chinese market grew by 9% year-over-year (YoY), while replacement tire demand decreased by 2% YoY; however, year-to-date (YTD) data remained positive for China in 2024 according to Michelin’s sales. Similar recovery trends were observed in other regions in May, with overall tire sales turning positive, though not yet reaching pre-pandemic growth levels. Tire companies worldwide have been increasing production, boosting raw material procurement and contributing to the strong surge in NTY prices.

Despite a 0.9% rise in production and increased NTY imports from China for tire production, high debt levels globally have discouraged central banks like the US Federal Reserve (despite a 0.9% rise in production and increased NTY imports from China for tire production) from easing interest rates, unlike the ECB's 25 basis point rate cut. The feedstock price pressures for NTY eased in May, resulting in strong margins during this period, prompting producers to increase NTY production downstream in June. Chinese domestic players have tightened major supplies for their inventories, selling them at higher prices to further increase margins. Supply disruptions, including Russian deliveries at lower prices to APAC markets compared to Indian CIF China and Russia quotations, have significantly contributed to these dynamics. Russian markets observed spot prices for June futures ranging from USD 2371/MT to USD 2625/MT on an FOB basis, whereas April NTY deliveries to India were quoted around USD 2200/MT.

NTY prices are expected to remain high in June 2024 but are projected to start moderating in July. This easing is anticipated due to declining crude prices, stabilizing freight charges, and a slowdown in APAC demand as the monsoon season peaks in Q3, reducing demand for chemical products.