Europe March nylon 6 rises €0.05-0.07/kg on tight supply

23 March 2010 23:59  [Source: ICIS news]

LONDON (ICIS news)--European nylon 6 contract prices for March have increased by €0.05-0.07/kg ($0.07-0.09/kg) from February due to tight supply and higher feedstock costs, buyers and sellers confirmed on Tuesday.

Virgin polymer nylon 6 contracts for the month settled at €1.80-1.90/kg FD (free delivered) NWE (northwest Europe), according to global chemical market intelligence service ICIS pricing.

One producer reported settling contracts as high as €1.95/kg, but this was not widely agreed.

Tight supply in the market was attributed to several factors, including increased demand, difficulty in obtaining the feedstock caprolactam and Domo Chemicals’ force majeure on nylon 6.

“We think the tight supply is genuine. Two producers have already asked if we can sell them product,” said a nylon compounder. 

Domo Chemicals declared force majeure on nylon 6, caprolactam and all intermediaries on 22 February due to problems with procuring raw materials following an explosion at Total’s propylene refinery at Leuna, Germany on 16 February, it confirmed in a letter to its customers.

A source with Domo Chemicals confirmed this week that the force majeure, which was originally expected to be lifted at the end of March, remained in place.

Ongoing difficulties in obtaining raw materials meant that the force majeure would most likely remain in place until mid-April, the company source added. 

Domestic demand was increasing due to restocking and a recovery in end-use markets as a result of the improving macroeconomic situation, according to market players.

Sources added that a rise in consumption was observed across all end-use markets, including the automotive sector.

Automotive demand was increasing mainly for large-vehicle production, sources said, although there had been a slight fall in small-vehicle production due to the end of government-sponsored incentive schemes. 

“There’s strong demand in Europe...all [downstream end-users] are in a good situation. Automotives too. Smaller cars are not running well because of the end of scrappage schemes. But larger vehicle production is improving,” said a nylon trader. 

Overseas demand remained high, particularly from Asia, as the strong US dollar against the euro continued to make European prices attractive to buyers in that region. 

Because of the tight supply and expectations that caprolactam prices would continue to increase, producers said they were targeting a rise of €0.05-0.10/kg in April. 

“I have the feeling that there could be further increases in the next few months, based on raw materials and the influence of Asia further tightening European supply,” said a producer.

($1 = €0.74)

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By: Mark Victory
+44 208 652 3214



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