FocusAsian capro shoots up as China’s nylon textile production peaks

21 April 2010 08:28  [Source: ICIS news]

By Junie Lin

SINGAPORE (ICIS news)--Asian caprolactam prices may further strengthen through to May after setting a new record high due to strong demand from key downstream market - China’s nylon textile industry, market sources said on Wednesday.

Peak production season for the industry - which accounts for 70% of overall demand for caprolactam -had started in March and would continue up to next month, they said.

Caprolactam spot prices in the northeast Asian region jumped to a range of $2,640-2,690/tonne (€1,954-1,991/tonne) CFR NE Asia (cost and freight) this week, up another $50-60/tonne from a week earlier, market sources said.

The chemical, which is an intermediate primarily used in the production of nylon 6 fibres, plastics and other polymeric materials, last set an all-time high prices in July 2008, based on data from global chemical market intelligence service, ICIS pricing.

Nylon producers complained about the high prices but were hard-pressed to accept them given a slew of end-product orders that needed to be fulfilled, said a source at a regional caprolactam producer.

Demand was also strong from the nylon tire cords, and food packing firms and resins segments, which account for the remaining 30% of total Asian demand for caprolactam, they said.

“With the current demand boost from these major segments, this would boost CPL prices significantly in the next two months,” an industry source said.

Caprolactam demand was also being boosted as some nylon producers were actively building up inventory, in preparation for the start-up of their new polymerisation plants, market sources said.

Taiwan's Li Peng Enterprise, a major nylon chips maker in the region, was now buying more caprolactam after it had expanded its production capacity to around 400,000 tonnes/year in February, they added.

Other major nylon chips producers in Taiwan are Formosa Chemicals & Fibre Corp (FCFC) and Zigsheng Industry and Hualon Corp.

Supply of caprolactam, meanwhile, could not satisfy the strong demand given a slew of ongoing maintenance turnaround at regional facilities, causing further pressure on prices, industry sources said.

In Taiwan, China Petrochemical Development Corp's (CPDC) 100,000 tonne/year plant in Toufen was still down for maintenance, with a possible delay in restart date, they said.

DSM Nanjing Chemical Co, meanwhile, has plans to shut its 200,000 tonne/year plant at Nanjing in July for three weeks, said a source close to the company.

“The current market could not withstand any sudden plant outages. If not, there will be a sudden price spikes,” said a source at one caprolactam producer.

Other key producers of caprolactam in this region are Japan’s Ube Industries and Sumitomo Chemical.

“The CPL market [supply] is set to be tight for the next one or two years. There is no CPL plants expanding fast enough to meet the demand from the expanding nylon plants,” said an industry source.

($1 = €0.74)

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections

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By: Junie Lin

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