24 August 2010 23:59 [Source: ICIS news]
LONDON (ICIS)--European nylon 6 August contract prices have settled at a fall of €0.04/kg ($0.05/kg) from July, at the top end of the price range, as a result of lower feedstock costs, buyers and sellers confirmed on Tuesday.
ICIS assessed European nylon 6 virgin polymer contracts at €2.00-2.10/kg FD (free delivered) NWE (northwest Europe).
Falls at the top end of the price range were linked to decreases in the price of the feedstock benzene in July and August, sources said.
The majority of August accounts, however, settled at a rollover from July – in spite of the €12/tonne fall in the upstream August benzene contract price – due to strong downstream demand.One buyer reported settling August contracts at €1.96/kg, but most sources said that prices below €2.00/kg were not possible.
“We’re not seeing anything below €2.00/kg,” said a nylon 6 buyer.
Firm nylon 6 demand was predominantly driven by buying interest from the automotive industry. This was attributed to an increase in purchases of large vehicles, which had been put off during the economic downturn.
In addition, demand strengthened as a result of supply constraints in Asia, which led market players there to again source material from Europe, exporters said.
Nylon 6 supply constraints, caused by difficulties in sourcing the feedstock caprolactam, were easing, some players said, because of end-users' plant closures during the summer holidays.
The outlook for September remained uncertain, with a few sources speculating that the market could tighten.
Nylon 6 producers said that order books for September were strong.
Some nylon 6 sources said that prices had now reached their peak due to the difficulties in passing increased costs downstream.
Nevertheless, sources agreed that it remained too early to predict September contract prices, which would be dependent on price movements upstream.
“It’s not clear if caprolactam (the feedstock for nylon 6) prices will go down on benzene (the raw material for caprolactam). It could be that nylon 6 settles for September at a rollover,” said a nylon producer.
($1 = €0.79)
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