Chemicals, Solvents & Intermediates, Olefins, Polymers

December 16, 2024

US-China trade relations to ripple through global fiber market in H1

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HIGHLIGHTS

Asian market expected to grow

US, Europe face consumption uncertainty

Demand in India expected to be resilient

The fibers market is expected to exhibit uneven conditions globally in the first half of 2025, largely depending on the direction of trade relations between China and the United States.

While the US outlook is characterized by uncertainty regarding domestic demand, in China, competitive prices are poised to support positive forecasts, although American trade barriers could alter this trajectory.

In other regions, India is anticipated to have more resilient demand, whereas concerns about the macroeconomic environment in Europe reflect more cautious forecasts.

Tariffs could boost US market

The incoming Trump administration has raised hopes of an improving US fibers markets. A nylon producer said market players have been "much more positive" of the macroeconomic environment, "especially tariff barriers against Chinese players."

US tariffs on China could prove pivotal for the automotive and construction sectors and the fibers used in everything from carpets to upholstery textiles - in which fibers like nylons play an important role.

US nylon imports from China were up 3% on year through October. Throughout the year, Chinese prices were $1,000/mt cheaper than US prices.

"Since the US fiber market is primarily carpet fiber, much of the development in 2025 will depend on how interest rates develop," the source said. "For engineering plastics, there is some pent-up automotive demand that may help volumes."

A more optimistic scenario would prove to be a turning point in a market where prices have been falling steadily over the past few months. Platts, part of S&P Global Commodity Insights, assessed nylon-6 resin ex-works US Southeast at 98.5 cents/lb Dec. 11, down 91.5 cents/lb from April 1, amid decreasing demand.

Oversupply pressuring China prices

In China, the domestic market has seen capacity for nylon-6 resins rise in H2 2024 to 600,000 mt/year, resulting in oversupply, market sources said.

FOB China nylon-6 resin prices have been on a downtrend since Platts commenced assessments April 1, falling to a low of $1,532/mt for bright and semi-dull grades and $1,582/mt for full-dull grade in mid-November. On Dec. 5, Platts assessed FOB China nylon-6 resin prices at $1,564/mt for bright and semi-dull grades and $1,614/mt for full-dull grade.

Market players said demand for nylon-6 resins is expected to pick up in late December 2024 and early January 2025 as textile and apparel makers ramp up production in preparation for the Lunar New Year. Price direction of nylon-6 resins would greatly depend on how well the oversupply is absorbed by the market, producers said.

Shanshan Dai, director of fibers at S&P Global Commodity Insights, expects further growth in the nylon-6 fiber market, especially in Asia in 2025. "Drivers will mainly come from branded sportswear and home textiles, as well as capacity growth in fiber manufacturing and the feedstocks," Dai said.

"Advancements in the skin-friendly features of nylon fibers, an increase in demand for functional textiles, and sufficient supply resulting in competitive prices will also play a major part in the growth of the industry," Dai said.

The market is also closely watching the latest developments on the imposition of additional US tariffs, especially on Chinese goods.

"Further tariffs introduced could noticeably hurt demand for China fiber exports," said Will Xu, associate director of polymers at Commodity Insights. "Otherwise, we will see in H1 2025 the continuation of the export momentum gathered in H2 2024."

Stable outlook for India

Market sentiment is that demand in India is likely to remain more resilient than in other regions, although the boost is likely to come more from improving profit margins, a major domestic fiber producer said.

If heavy competition from lower-priced imported material persists into 2025, fiber plant operations could go down, according to industry sources.

A trader said feedstock inquiries are expected to remain steady.

Acrylic staple fiber CIF India has been stable in the end of 2024. Platts assessed the product at $1,695/mt CIF India on Dec 5.

European demand a concern

The European market is anticipated to continue facing challenges due to a decline in consumption. For nylons, demand remained flat towards the end of 2024, with sources indicating expectations were not evolving as projected, leading to a more pessimistic outlook.

In the acrylic staple fiber spot market, a general weakening in demand throughout the entire value chain has been seen, from fabric manufacturers to yarn converters and producers, with expectations the trend will persist into 2025, a source said.

Demand in the first quarter is unlikely to see improvement, with expectations leaning toward stability or further weakness at the beginning of the year, a market player said.

Due to their preferred characteristics and lower price, cotton and polyester are likely to capture a larger fiber market share in 2025.

Platts acrylic staple fiber prices have been stable heading into December and were assessed at $3,000/mt DAP Turkey on Dec 5.