European September nylon 6,6 orders fall by 40% - buyer

03 August 2010 17:24  [Source: ICIS news]

LONDON (ICIS)--Europen nylon 6,6 (polyamide 6,6) virgin polymer contracted volumes for September have fallen by 40% due to structural shortages, a nylon 6,6 buyer said on Tuesday.

“6,6 orders for September are being delayed, orders are being cancelled, we’re only getting 60% of our contracted volumes,” the buyer said.

A producer said that it had also heard rumours of cancellations at 40%, adding that all producers had long lead times and were struggling to fulfil orders.

“We’ve heard that 40% of orders are being cancelled. It is [nylon 6,6 supply] very tight. We’re not aware of any production stoppages, but demand is holding up well,” the producer said.

According to sources, so far up to 20% of orders were cancelled during the second and third quarters, due to limited availability.

The reported increase in cancellations was attributed to stronger than expected demand during the summer months from the major downstream automotive sector.

Traditionally, during July and August there is a slowdown in consumption of nylon 6,6. However, in 2010 a growth in purchases of large vehicles in the downstream automotive market, due to latent demand from the economic recession of 2008 and 2009, and Asian consumption was keeping demand at a high level.

Most north European players said that they would not shut down during August this year. Sources in southern Europe said that they would shut for one-to-two weeks, instead of the usual four-week shutdowns during August. They added that this was the minimum length of shutdown they could implement in order to undertake needed maintenance.

“At the moment we have many orders. There’s been an increase in 6,6 imports in Asia, which are at 2007 levels [pre-recession],” a nylon producer said.

Nevertheless, some sources said that nylon 6,6 buying interest from Asia in the later half of August was low, signalling that Asian players expected automotive demand to be weak during the fourth quarter.

They added that the weakening of the US dollar against the euro was further reducing the attractiveness of European material in Asia.

Nylon 6,6 has been structurally short since the fourth quarter of 2009 following market consolidation during the global economic downturn of 2008 and 2009, and a force majeure (FM) at Rhodia Polyamide on nylon 6,6 and intermediaries.

Rhodia polyamide has been in FM since the fourth quarter of 2009. This was initially caused by low water levels on the River Rhine, which led to logistical difficulties, but was now due to the low availability of feedstock adiponitrile.

A company source confirmed that the FM remained in place, and there was as yet no indication of when it would be lifted.

The nylon 6,6 market was expected to remain tight throughout 2010.

It remained too early for players to discuss fourth quarter nylon 6,6 prices, due to a lack of transparency over fourth quarter demand, and uncertainty over the development of feedstock costs.

Third quarter nylon 6,6 virgin polymer contracts settled at €2.60-2.75/kg ($3.42-3.62/kg) FD (free delivered) NWE (northwest Europe), an increase of €0.10/kg from the second quarter.

($1 = €0.76)

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By: Mark Victory
+44 208 652 3214

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