Corrected: Europe Nylon 6,6 players report very tight supply

15 September 2009 16:58  [Source: ICIS news]

Correction: In the ICIS news story headlined “Europe Nylon 6,6 players report very tight supply” dated 15 September 2009, please read in the fourth paragraph … settled at €1,800-1,900/tonne … instead of … settled at €1,550-1,650/tonne…. A corrected story follows.

LONDON (ICIS news)--Supply in the European nylon 6,6 market is very tight due to low inventory levels, increasing demand, market consolidation earlier in 2009 and problems securing feedstock adipic acid, buyers and sellers said on Tuesday.

“There are big problems with availability [of nylon 6,6]. Everybody is sold out at the moment,” a major producer said, adding that its supply was now fully booked for the entire fourth quarter.

Buyers and sellers expected the tight supply to continue throughout the remainder of 2009, and producers were now targeting price increases of up to €300/tonne ($441/tonne) in fourth-quarter contracts. Buyers accepted that tight supply would drive contract prices higher.

No contract agreement was reached between buyers and sellers in the third quarter due to market volatility throughout the quarter. The second-quarter contract price settled at €1,800-1,900/tonne FD (free delivered) NWE (northwest Europe), according to global chemical market intelligence service ICIS pricing.

“There’s not a lot of free material floating around the market. It’s a producers’ market,” one nylon 6,6 buyer said. Referring to margins for nylon 6,6 buyers producing engineering plastics already being squeezed, the source went on to say: “We [buyers] may need to take a quarter of pain [and accept higher prices] in nylon 6,6 to secure supply and maintain relationships.”

A producer added: “Buyers are more worried about securing volumes than prices at the moment. Supply is very tight.”

The reports of tight supply followed confirmation from a source at Radici group earlier on Tuesday that it had placed its 90,000 tonne/year nylon 6,6 plant at Novara, Italy, on allocation due low inventory levels and improving demand. Nylon 6,6 was expected to be on allocation until the end of the year, the source said.

Nylon 6,6 suppliers’ inventory levels were running low following seasonal August shutdowns, and September had seen increased demand due to a recovery in the end-use automotive sector, buyers and sellers said. .

Market capacity had already been reduced by market consolidation earlier in the year and producers were now struggling to meet demand, they said. One producer estimated that nylon 6,6 consolidation in 2009 had removed 250,000 tonnes/year from the market.

Availability issues were further heightened by difficulties in sourcing feedstock adipic acid, producers said, which was also in tight supply following planned and unplanned production outages, according to sources.

($1 = €0.68)

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By: Mark Victory
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