FocusAsia nylon chips soar to fresh record high on strong demand

17 November 2010 08:27  [Source: ICIS news]

By Junie Lin

SINGAPORE (ICIS)--Spot prices of semi-dull nylon chips in Asia continued to spike this week, hitting fresh record highs of $3,000-3,100/tonne (€2,220-2,294/tonne), on the back of healthy demand and firm values of feedstock caprolactam, market sources said on Wednesday.

Some major sellers may be running out of stocks to sell amid robust demand from China’s textile sector, which was driving up prices across chemicals used in the industry chain, they said.

Nylon 6, commonly termed as polyamide 6 or polycaprolactam, is widely used in the manufacture of hosiery, knitted garments, threads, ropes, filaments, nets and tyre cords.

“Most of the other nylon majors probably have very little cargo left to offer anymore, that’s one of the reasons why they are quoting such high prices now,” said a regional nylon producer.

Some of them may have even booked sales up to early December or even January, market sources said.

Bulk deals of Taiwanese material were confirmed at $3,100/tonne on Tuesday. Selling indications this week would not fall to below $3,100/tonne, which was $50-100/tonne higher than last week’s because of high caprolactam costs, several producers said.

A Taiwanese supplier said he was already quoting prices at close to $3,150/tonne CFR (cost & freight) China this week.

Last week, a huge portion of November and December nylon chip cargoes were sold at $3,020-3,030/tonne CFR China, representing a $70-90/tonne week-on-week increase, according to ICIS.

Buyers had remained accommodating to higher prices of nylon chips since the price increase was comparatively benign compared to spikes in cotton and polyester prices, market sources said.

“Nylon was still deemed as a cheaper alternative,” said another producer.

Offer prices may again increase beyond $3,150/tonne CFR China once the contract price for December caprolactam was announced, market sources said.

The unidirectional movement of nylon chip values, however, had some sellers and distributors worrying over an impending price collapse by the end of the year and in early 2011.

The current price spread between nylon chips and caprolactam stood at $300-400/tonne, higher than the typical $250-300/tonne levels that allow nylon chip makers healthy margins, based on ICIS data.

The numbers were calculated based on the November contract prices of caprolactam at $2,700/tonne.

Caprolactam is an intermediate primarily used in the production of nylon 6 fibres, plastics and other polymeric materials.

($1 = 0.74)

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By: Junie Lin

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