As the new year of 2025 unfolds, the nylon 66 (PA66) sector, a high-end chemical material crucial for lightweight automotive applications, is making headlines with the launch of new projectsThis industry has seen remarkable growth in terms of project construction over the last two years, and the number of companies entering this field is steadily increasing, leading to a rapid expansion of production capacity.

One of the major contributing factors to this boom is the domestic breakthrough in key raw materials that previously faced supply chain constraintsThis has accelerated the domestic replacement of imported PA66, which we anticipate will drastically decrease in imports by 2024. Experts in the field have pointed out that PA66 boasts high-performance attributes, allowing it to be used in numerous applicationsAs production costs decrease, market demand for PA66 is expected to soar exponentially

The swift expansion of capacity within the sector has prompted various industry players to place their bets on the promising future of PA66.

However, amidst this rapid capacity expansion lies a growing concern about potential oversupply in the futureAnalysts project that the price of PA66 might weaken by 2025, but this does not appear to dampen the momentum for businesses to carve out a space in the marketWith companies continuing to focus on breakthroughs in research and development, there is optimism that the industry is on the brink of maturation.

The influx of new entrants is notableFor instance, on January 2, 2025, Longhua New Materials announced that its wholly-owned subsidiary, Longhua High Materials, completed the first phase of its 108,000-ton-per-year PA66 projectThis phase has begun trial production, yielding qualified products alreadyThis project stands as the first PA66 project to enter production in the industry this year.

Dense periods of new project launches are also emerging in the industry

• Russia's Economy Maintains Growth
• Market Pessimism Toward the UK Economy
• Challenges to U.S. Debt Sustainability
• Regions Target Strong Tourism Rebound
• Low-Altitude Economy: A Long-Term Outlook

For example, in December 2024, Huali Hengrui announced that its high-end PA66 material project had successfully cleared process bottlenecks, entering trial productionUpon reaching full capacity, this project will add an additional 200,000 tons per yearSimilarly, Nanshan Zhishang reported production commencement on an annual output of 80,000 tons of differentiated nylon filaments, including 36,000 tons of PA66 filaments, with the timeline for this project completed nearly six months ahead of schedule.

Moreover, numerous companies, both listed and unlisted, are on track to increase their production capabilitiesAccording to data from Zhuochuang Information, by December 31, 2024, China's total PA66 production capacity surged to 1.27 million tons, with an additional 350,000 tons slated for introduction in 2024. In the next five years, plans indicate a potential increase of up to 4.544 million tons, with approximately 2.114 million tons expected to be realized based on the actual progress of new factory projects.

Analyst Qiao Zongying noted that some of the largest projects currently in development include 400,000 tons by Fujian Fuhua Gulei Petrochemical, 1,040,000 tons by Shandong Longhua High Polymer Materials, and another 400,000 tons by Tianjin Xinhacheng Material Technology

Additionally, China National Petroleum's Liaoyang Petrochemical is projected to commence production by July 2025.

With China continuously improving its industrial chain for PA66, a significant shift of global PA66 production capacity towards China is underwayIn recent years, international giants like Invista have increased their investments in ChinaNotably, the expansion of Invista's PA66 polymer production facility in Shanghai was completed last year, boosting capacity from 190,000 tons to 400,000 tons.

Currently, China is a net importer of PA66, but as domestic production increases steadily, the reliance on imports has seen a ranging decline from 2020 to 2024. Statistical reports indicate that in 2023, China's PA66 imports decreased by 3.5% year-on-year, with a total import value dropping by 23.7%; thus, the domestic dependency on PA66 imports has dropped sharplyLooking ahead, Qiao forecasts a 9.42% reduction in PA66 imports, estimating the figure to be 173,000 tons for 2024, with import dependency decreasing from 49% in 2020 to an anticipated 24% in 2024.

The factors underlying this growth trend include the widespread applications of nylon materials, cementing their status as essential components in chemical new materials

Viewed as the "leading engineering plastic," PA66 serves a multitude of high-end applications, from engineering plastics to commercial textiles and high-performance fabricsIt plays a pivotal role in the automotive industry, contributing to the critical weight reduction efforts necessary for improving fuel efficiency and vehicle performance.

In past years, the reliance on acetonitrile, a key raw material for PA66, was predominantly rooted in importsHowever, breakthroughs in domestic acetonitrile production have emerged since 2019, significantly mitigating this dependencyIn 2019, Huafeng Group pioneered the industry's first project to produce acetonitrile via the adipic acid method in ChinaBy August 2022, Tianchen Qixiang, a subsidiary of China National Chemical Corporation, announced successful output from its 200,000 tons-per-year acetonitrile project, further enhancing the domestic capacity for PA66 production.

Today, the automotive sector remains the largest consumer of PA66, aligning with a global trend toward material lightweighting, replacing metal components with PA66—a material noted for its lightweight, heat resistance, high durability, and strength—fulfilling evolving demands across automotive, rail transit, and electronics sectors needing material reduction.

The leadership at a major new material firm in East China, Xu Hua, expressed a positive outlook for PA66's future market prospects in automotive lightweighting, estimating an average use of approximately 100 kilograms of PA66 per vehicle

Additionally, PA66 stands out in terms of electrical, flame-retardant, and mechanical properties"In the long run, the increased supply of raw materials and decreasing costs are inevitable trends that will catalyze growth in application scenarios; thus, we foresee exponential growth in demandThis has driven various companies to strategically position themselves within this space," Xu stated.

Despite the industry’s rapid expansion, concerns around overcapacity loomAnalysts like Qiao emphasize that while the PA66 industry experiences heightened production capabilities, the supply appears to be outpacing demand, reducing industry capacity utilization from 69% in 2020 to 55% in 2024, thereby indicating a trend toward overcapacity.

On the demand side, growth for PA66 consumption remains moderateProjections for 2024 see the structure of downstream consumption remaining stable, with modified engineering plastics as the most significant application segment

Predominantly, the downstream applications for PA66 are segmented across modified engineering plastics (accounting for 55%) and nylon 66 fibers, which include industrial (28%) and commercial (14%) usesWith the release of new capacities in both industrial and commercial fibers, product consumption will see an uptick, while engineering plastics see minimal expansion, leading to limited growth overall.

"In recent years, the macroeconomic environment has affected downstream demand significantlySome fields with potential for premium material substitution have progressed less than expected, delaying consumption upgrades," noted XuIt was highlighted that many automotive parts are still using alternative engineering plastics like PA6 and polypropyleneDespite initial interest in switching to PA66 for external components and bumpers, cost considerations have stalled these developments.

Qiao concluded that the primary challenge for domestic substitution is that high-end applications still tend toward imports

Regardless, the current pain point for PA66 lies in the fact that supply growth outpaces demand, coupled with ongoing issues surrounding the supply of acetonitrileHe anticipates that PA66 pricing will see a tendency to decline from high to low by 2025, with average prices likely falling below those of 2024.

Even with such challenges, numerous companies continue to pursue growth in PA66 capacitiesXu believes that optimism surrounding long-term prospects drives this ambition, coupled with a competitive mindset to secure market share"Although some projects initially set to launch have experienced delays, many will still begin partial production to enter the market earlyAs economic conditions improve over the coming years and companies refine their processes, the industry will gradually mature," he added.

Overall, there is a consensus within the industry that as raw material supply constraints are addressed, the PA66 sector is set for rapid expansion