Europe caprolactam June contract rolls over from May

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

LONDON (ICIS news)--Following a tough and drawn-out round of price discussions, the June caprolactam contract has settled at a rollover from May despite weaker benzene values, market sources confirmed on Wednesday.

“We have rolled over our caprolactam contracts in June,” confirmed a major European producer. The producer played down the correlation between benzene and caprolactam prices, citing movements in other raw materials as more important.

“Benzene has always been important, but it’s not the most important thing. What is more important is ammonia, natural gas and sulphuric acid, particularly since these are all priced in euros which makes them more expensive,” the producer said.

The June caprolactam pre-discounted contract price settled at €2,190-2,246/tonne ($2,704-2,773) FD (free delivered) NWE (northwest Europe).

Despite a €59/tonne ($73/tonne) drop in the value of the June benzene contract, caprolactam producers were unwilling to “share” the benzene reduction, buyers said.

“We wanted a share of the benzene. I asked for a reduction, but the market is still short,” a major buyer confirmed.

Another contract settler on the buying side said: “On paper it’s [June contract price] all a rollover. Availability is still an issue for consumers, but if China does not take all they said they would then it will become an issue for European producers.

For the third consecutive month, the benzene contract price has fallen, while the caprolactam contract price has increased or remained the same. Tight supply and ongoing strong demand in Europe and for export to Asia was cited as the reason for this.

Despite the likelihood of another drop in the July benzene contract price, a major caprolactam producer said it would continue to protect its profit margin since demand in Europe and Asia was expected to remain strong for the rest of 2010.

“It’s really too early to talk about July, but I don’t seen a drop in demand or any new production coming on-stream. The July price will be very important,” the producer concluded.

($1 = €0.81)

For more on caprolactam visit ICIS chemical intelligence 
To discuss issues facing the chemical industry go to ICIS connect

By: Julia Meehan
+44 20 8652 3214

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