Europe nylon 6 June contracts settle at rollover to €0.05/kg down

22 June 2010 23:59  [Source: ICIS news]

LONDON (ICIS news)--European nylon 6 June virgin polymer contract prices settled at a rollover to a €0.05/kg decrease, buyers and sellers confirmed on Tuesday.

Despite a €59/tonne fall in the upstream benzene price, strong nylon 6 demand and tight supply prevented stronger price falls in June, they added.

Nylon 6 June virgin polymer contracts settled at €2.00-2.15/kg FD (free delivered) NWE (northwest Europe).

Some buyers saw nylon 6 June prices as low as €1.98/kg, but this was mainly for formula-related business and not seen as representative by the bulk of players.

Prices at the upper end of the range, at €2.15/kg, were mainly for buyers linked to the automotive industry where consumption was highest. Most players linked to this market reported the starting price for June prices at €2.05/kg.

"Maybe that [prices at €2.15/kg] you can sell in to the auto market, but in textiles, €2.00/kg is the psychological barrier – after that we stop buying,” a nylon 6 buyer said.

Prices at €2.00/kg were mainly reported by sources linked to the fibre and carpet end-use markets, where demand was weakest.

Strong nylon 6 consumption in June was linked to the downstream engineering plastics sector, which was buoyed by heavy buying interest from the automotive industry in Asia.

Some players also reported that domestic engineering plastic players were increasing their usage of nylon 6 as a substitute for nylon 6,6, as the nylon 6,6 market was structurally tight and would remain so in the long term. Other sources disputed this, pointing to logistical obstacles that made it difficult for end-users to switch between the two materials.

“It’s not easy or clever to switch [from nylon 6,6 to nylon 6],” a nylon 6 and 6,6 compounder said.

Tight nylon 6 supply was linked both to high consumption and low availability of feedstock caprolactam.

“The market remains tight because a lot of product is going to Asia and automotive demand is strong,” a nylon 6 producer said.

Nevertheless, a minority of compounders said feedstock shortages had now eased, but the market remained tight as producers were unwilling to increase operating rates ahead of the traditional holiday slowdown in July and August.

“Suppliers are hesitating to increase operating rates ahead of holidays in the summer,” a compounder said.

Opinions over the direction of nylon 6 prices in July were mixed, although it was still too early for firm predictions.

Producers were expecting prices to go up, predicting that demand would remain strong, driven by automotive demand in Asia, and that there would be continued tight supply in the nylon 6 market. One producer said it had sold out of material for July.

Buyers, however, expected summer slowdowns to improve availability and bring prices lower.

“We’ve confirmed availability for July. It’s the first time since April that we’ve had a reasonable degree of confidence that we can stock everything we need for next month,” a nylon 6 buyer said.

($1 = €0.81)

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By: Mark Victory
+44 208 652 3214

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