FocusEurope capro buyers push for July relief

16 July 2008 14:39  [Source: ICIS news]

By Julia Meehan

LONDON (ICIS news)--A drop of €18/tonne ($29/tonne) in the value of July benzene should be reflected in that month's caprolactam contract price, major buyers confirmed on Wednesday.

“We are pushing for a reduction on the benzene and we want the full €18/tonne,” said a major caprolactam consumer. “We are discussing again to reach a deal.”

The June caprolactam contract was agreed at an increase of €75/tonne at €2,019-2,060/tonne FD (free delivered) NWE (northwest Europe), on the back of the €97/tonne hike in the June benzene contract price. 

Another major buyer of caprolactam for the production of nylon voiced a similar sentiment.

“Even if producers are asking for a rollover, I don’t see why prices will not decrease by a proportion of the benzene, around €7-10/tonne,” the consumer added.

Producers reported that July contracts had closed at a rollover from June, although a major producer said that it was trying to recover some of the significant increases needed to compensate for the first half of the year.

“Energy is one thing, but sulphur is hitting us hard and efforts will continue despite the drop in benzene,” said the major producer. “Most caprolactam is linked to formula and sulphur is out of this formula,” the producer added.  

Sulphur contracts, agreed biennially, have almost doubled for the second half of the year. Contracts increased by $320-400/tonne to $650-600/tonne FD Benelux.

An increase of €15-25/tonne in the third-quarter cyclohexane contract delta, alongside an €18/tonne drop in the July benzene contract "should result in a rollover", another key contract settler of the selling side reported.

“The cyclohexane delta is crucial to our negotiations,” the seller concluded.

Weaker than expected demand during the summer months was also a talking point in contract discussions.

“Caprolactam is long and we are buying some 25-30% less because of the summer period, so why should we accept a rollover,” a major textile manufacturer said.

“The market is very quiet,” said another textile producer, adding that there was a lot of "quantity in the market".

Producers confirmed that demand was slower than expected for the time of year, particularly in the textile and fibres business.

Two thirds of caprolactam production is used to manufacture nylon 6 fibres, with the remainder used in the engineering plastics sector.

European producers of caprolactam include BASF, Domo Caproleuna, DSM, Lanxess and Ube.

($1 = €0.63)

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By: Julia Meehan
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