FocusEurope nylon 6,6 downstream players eye switch to nylon 6

16 March 2010 16:26  [Source: ICIS news]

By Mark Victory

LONDON (ICIS news)--European nylon 6,6 buyers and sellers are expecting a growing number of downstream players to switch to nylon 6 in 2010, they said on Tuesday.

The forecasts came amid tight supply in the nylon 6,6 market since the fourth quarter of 2009, due to market consolidation and a force majeure at Rhodia Polyamide that began on 12 October 2009 and was said by market sources to remain in place.

Structural changes in the nylon 6,6 market in 2009 had led to a reduction in European nameplate capacity of around 250,000 tonnes/year, and production was no longer sufficient to cover demand, buyers and sellers said.

“The availability of nylon 6,6 is so limited that no one can afford to depend on it,” a nylon producer said.

The tight supply of nylon 6,6 was making it difficult to obtain sufficient volumes, buyers said. In addition, prices were operating at a premium to nylon 6 of around €60/tonne ($82/tonne), and were expected to further increase when nylon 6,6 second-quarter contracts are finalised.

“There are so many applications of nylon 6,6 that could run in [nylon] 6.... If the tight supply [of nylon 6,6] continues people will switch,” a nylon 6,6 compounder said.

Tight supply was expected to be a long-term issue in the nylon 6,6 market, with some sources predicting that it could remain in such a state for the next few years.

“From a structural point of view, it’s evident that there is no investment in the nylon 6,6 chain. There have been some announcements in Asia, but nothing concrete. No one is replacing the idled capacity,” a buyer said.

The move away from nylon 6,6 towards nylon 6 would be most apparent in the downstream automotive and carpet sectors, sources said, which are currently the major end users of nylon 6,6.

“In the automotive and carpet sectors, nylon 6,6 will become more and more niche, because prices are so high,” a compounder said.

Nylon 6,6 first-quarter virgin polymer contract prices settled at €2.25-2.45/kg, whereas February nylon 6 virgin polymer contract prices finalised at €1.73-1.85/kg, according to global chemical market intelligence service ICIS pricing.

Nylon 6,6 contract negotiations were yet to begin. Nevertheless, players were expecting sharp increases in the second quarter, with prices expected to rise by at least €0.25/kg due to the tight supply.

March nylon 6 contract negotiations were ongoing. A number of buyers and sellers predicted that March contract prices would finalise at €1.80-1.90/kg, a rise of €0.05-0.07/kg from February. This was consistent with other forecasts of rises of €0.5-0.10/kg in March due to tightening supply.

Apart from the lower comparative price of nylon 6, the material is more environmentally friendly than nylon 6,6, sources said. They added that this would strengthen the desire for automotive manufacturers to switch products, as green issues were becoming more important in the sector.

“Automotives is an industry which is more and more looking for green [environmentally friendly] products. [Nylon] 6,6 is less green than [nylon] 6. Because of this, there could be a switch,” a nylon 6,6 buyer said.

The Rhodia force majeure was originally declared on 12 October 2009 because low water levels on the River Rhine caused logistical constraints, which prevented the company from sourcing butadiene (BD).

Water levels on the Rhine had since returned to normal and Rhodia was in the process of exiting the force majeure on nylon 6,6, the company said last week. BD production constraints and forces majeures at SABIC on BD, however, caused continued difficulties in sourcing nylon 6,6 feedstocks and led to Rhodia’s continued need to remain under force majeure, the source added.

BD is a feedstock for adiponitrile (ADN), which in turn is the feedstock for nylon 6,6.

($1 = €0.73)

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By: Mark Victory
+44 208 652 3214

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