FocusAsia nylon chips buyers disappear as suppliers quote $3,000/t

03 June 2010 05:38  [Source: ICIS news]

By Junie Lin

SINGAPORE (ICIS news)--Buyers of semi-dull nylon chips in Asia chose to stay on the sidelines for most of May, as producers are bent on pushing prices to a fresh high, market sources said on Thursday.

Poor sales ensued after suppliers offered the material at $3,000-3,050/tonne (€2,460-2,501/tonne) CFR (cost and freight) China in early May, citing high costs of caprolactam - the feedstock for nylon chips.

“Just three words: Business is bad,” said a Taiwan-based nylon chip producer.

Spot nylon chips prices remained at their 22-month high of around $2,900/tonne CFR (cost and freight) China for four consecutive weeks on 1 June, based on data from ICIS pricing.

“I think $3,000/tonne CFR China is too expensive. Maybe with benzene tumbling down, $2,900/tonne CFR China seems more acceptable. But we still need to monitor the situation,” said a Taiwan-based trader in Mandarin.

May contract prices for caprolactam, meanwhile, were settled at about 7% higher than April’s numbers at $2,700-$2,720/tonne (€2,187-2,203/tonne) CFR (cost and freight) NE (northeast) Asia – levels last seen in March 2005, according to ICIS pricing.

With June caprolactram contract offers announced on Wednesday still at a five-year high of $2,700 CFR NE Asia, nylon chips producers hope to push for higher prices, industry sources said.

But weak spot sales of nylon chips over the past three weeks had forced some producers to reduce operating rates at plants to as low as 60%, industry sources said.

Nylon 6 is widely used in the manufacture of hosiery, knitted garments, threads, ropes, filaments, nets and tire cords.

Peak production at key downstream textile sector had just ended, taking out a strong demand support for the nylon chips market, but demand coming from the tirecord segment has remained firm, industry sources said.

“Let’s hope June nylon chips sales would be better,” said a market source.

The price direction for the material would be clearer in the next two weeks as end-users in the textile yarn sector would “have to start buying soon as [their nylon chips] inventories are running low”, said the Taiwan-based trader.

Among the nylon makers based in Taiwan are Formosa Chemicals Fibre Corporation, Li Peng Enterprise Co, Zig Sheng Industrial Co, Hualon Corporation, China Petrochemical Development Corporation.

Source: ICIS pricing

($1 = €0.82)

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By: Junie Lin

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