Caprolactam supply in Europe critical on strong Asia demand

24 March 2010 14:48  [Source: ICIS news]

LONDON (ICIS news)--The supply of caprolactam in Europe has become critically low, largely as a result of strong demand from Asia but also because of production constraints and healthier polymer demand, sources said on Wednesday.

“The market is very, very tight and there is still strong demand. Region-wise it is still driven by Asia,” a European producer said.

Demand for flaked caprolactam from Europe to Asia has been gaining momentum since the end of the third quarter of 2009 following the anti-dumping duties imposed on nylon 6 in China. As a result, Chinese spinning facilities increased production without sufficient local caprolactam production.

“Asian caprolactam buyers are now the competitors. They are not spot customers anymore and are looking for long-term contracts,” said a major European producer, which has been flaking an undisclosed percentage of its European production for the Asian market.

The producer source described the availability situation as “absolutely critical”.

A buyer also viewed the European caprolactam market as tight: “There is an acute problem with supply because some people are opting to ship to Asia.”

The buyer did not see its own downstream demand into the flooring sector as improving.

Another consumer in Europe confirmed that it was now in direct competition with its counterparts in Asia.

“The market is tough, it’s highly tight. For March we have been able to minimise the increase but for spot it’s terrible - our offer for spot in Europe is the same as Asia,” the buyer said.

Spot caprolactam in Asia continued to firm this week, with prices in China at $2,490-2,500/tonne (€1,843-1,850/tonne) CFR (cost and freight).

Demand for caprolactam derivatives has also been improving since the fourth quarter of 2009, which has been exacerbated by various unplanned production issues in Europe.

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

($1 = €0.74)

For more on caprolactam visit ICIS chemical intelligence
Please visit the caprolactam ICIS plants and projects database 
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By: Julia Meehan
+44 20 8652 3214

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