Europe nylon 6,6 Q2 prices at record high on supply shortages

27 April 2010 23:59  [Source: ICIS news]

LONDON (ICIS news)--European nylon 6,6 virgin polymer second quarter contract prices settled at an increase of €0.20-0.25/kg ($0.27-0.33/kg), to a record high of €2.50-2.65/kg, due to globally tight supply, buyers and sellers said on Tuesday.

The price of virgin polymer nylon 6,6 is now at its highest point since ICIS records began in November 1999. The previous record high was €2.48/kg, reported between 1 July until 23 September 2008.

The price was settled on a free delivered (FD) northwest Europe (NWE) basis.

“We’re seeing kind of a record-breaking number right now. [nylon] 6,6 is globally tight,” a major producer said.

The low availability of nylon 6,6 in Europe, which began in the fourth quarter 2009, was caused by consolidation in 2009, difficulties in obtaining feedstocks adiponitrile (ADN) and adipic acid, and an ongoing force majuere (FM) on nylon 6,6 and intermediaries at Rhodia Polyamide, sources said.

A buyer noted: “The situation is still complicated. We can’t get material; we had to reduce our requirements.”

Players estimated that consolidation within the nylon 6,6 and ADN markets in 2009 had removed approximately 250,000 tonnes/year of nylon 6,6 capacity and 300,000 tonnes/year of ADN capacity.

The consolidation was driven by low consumption rates that resulted from the global economic downturn’s effects on the automotive sector, which is the major end-use market of nylon 6,6 and ADN, sources added.

The FM at Rhodia was originally declared on 12 October 2009, initially because low water levels on the Rhine had caused logistics constraints.

Nevertheless, shortages in feedstock supplies caused ongoing issues, and the FM remained in place ahead of a planned maintenance turnaround, scheduled from 21 May until 28 June 2010, a company source said.

Nylon 6,6 was expected to remain in tight supply throughout the second quarter, and sources said that any easing would depend on when raw materials became more available.

“Things will be tight until at least September,” a buyer said.

Domestic demand remained strong, but had seen a slight dip in April due to a number of public holidays across Europe, players said.

A consumer commented: “Downstream demand is okay, but we’ve seen a slight slowdown in April, mainly due to Easter and other holidays in several European countries.”

Some sources said that actual consumption levels were difficult to assess as buyers were placing multiple orders at several producers to ensure supply.

“Demand is strong, but buyers are asking multiple suppliers to ensure volumes,” a buyer said.

There remained heavy buying interest from Asia, exporters confirmed, as this region was the shortest globally, sources said. Export prices to Asia were around $3.80/kg, which put them roughly at parity with European prices, according to exporters.

“Supply is particularly tight in Asia. Eruope is at a comparable level [price-wise with Asia],” a producer said.

Nylon 6,6 spot prices were trading at up to €2.80/kg, some sources said.

($1 = €0.75)

For more on nylon visit ICIS chemical intelligence
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By: Mark Victory
+44 208 652 3214

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