FocusAsia caprolactam to extend gains on better demand

01 September 2010 06:22  [Source: ICIS news]

By Junie Lin

SINGAPORE (ICIS)--Asian spot caprolactam prices may continue to increase on the back of stronger demand, as China goes into its peak manufacturing season, while supply may tighten, industry sources said on Wednesday.

Spot capro prices edged up $20-40/tonne week on week to $2,570-2,600/tonne (€2,030-2,054/tonne) CFR (cost and freight) northeast (NE Asia)/China/Taiwan on Wednesday, based on ICIS data.

The expected lifting of government restriction on energy use by industries in Zhejiang province – the seat of China’s textile industry – should help boost production of nylon yarn, which is the downstream market for caprolactam, industry sources said.

This energy restriction would last longer than initially expected and would only be lifted in late September or early October, they said. Current nylon yarn production in the province averaged just about 60% of capacity, market sources said.

Caprolactam sellers had raised their September contract offers by $80-100/tonne from August levels to $2,600-2,610/tonne CFR NE Asia, market sources said. In August, contract prices were at $2,500-$2,530/tonne CFR NE Asia, according to ICIS. 

Most players in the nylon industry, however, were only hoping for a marginal increase to not more than $2,550/tonne CFR NE Asia, industry sources said.

But price pressures were expected to build up from October, when a number of major caprolactam plants would undergo turnarounds, tightening the supply available in the market, market sources said.

Capro Corp, South Korea’s only producer of the material, plans to shut its 270,000 tonne/year plant for two weeks of maintenance in October, a company source said.

In Japan, Sumitomo Chemical would shut its 180,000 tonne/year capro unit in Ehime prefecture for a month of maintenance in November, according to a company source.

Meanwhile, China Petrochemical Development Corporation (CPDC) intends to shut its 180,000 tonne/year unit in Kaohsiung, Taiwan in end December for 45 days of scheduled maintenance, said a company source. CDPC is the only producer of capro in Taiwan.

Caprolactam is an intermediate primarily used in the production of nylon 6 fibres, plastics and other polymeric materials. Nylon 6 is widely used in the manufacture of hosiery, knitted garments, threads, ropes, filaments, nets and tyre cords.

($1 = €0.79)

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By: Junie Lin

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