FocusAsian capro spot prices rebound, uptrend likely to continue

09 December 2010 06:07  [Source: ICIS news]

By Junie Lin

SINGAPORE (ICIS)--Asian caprolactam spot sentiment rebounded as buyers - after staying away for two weeks - stepped in to replenish stocks with the uptrend seen continuing in 2011 due to an expected tight supply, buyers and sellers said on Thursday.

Spot prices were assessed up on Wednesday by $50-85/tonne (€38-64/tonne) week on week to $2,810-2,840/tonne CFR (cost & freight) China and $2,800-2,830/tonne CFR Taiwan, ICIS data showed.

In tandem with the high contract prices, spot offers swiftly moved up to $2,860/tonne CFR China by Wednesday, with deals heard at $2,815-2,840/tonne CFR China on a 90-day (LC) letter of credit basis.

“No one would want to sell at below $2,800/tonne CFR China now,” one trader said.

In Taiwan, buying ideas also increased $50/tonne week on week to $2,800/tonne CFR Taiwan on an at-sight basis this week.

Most market participants attributed the latest price rise to tight caprolactam supply, which is not going to ease next year as well, thus supporting higher values for the material in the months ahead.

Caprolactam production in the key China market was expected to stay the same until 2012, but as the downstream nylon sector was expanding rapidly, the tight supply of the material could last throughout 2011 and beyond, traders said.

Outside Asia, US producer Honeywell on Tuesday confirmed that it had declared force majeure (FM) on caprolactam last week after the unplanned shutdown of its 375,000 tonne/year Hopewell plant in Virginia.

Honeywell supplies caprolactam to customers in the US and other markets, including large volumes to Asia of around 6,000 tonnes per month, market sources said.

However, the FM did not generate panic buying in Asia as some regional buyers were informed that the FM might only apply to US customers.

They were also informed that the plant might be back to normal in less than two weeks and might just affect the US market, regional players said.

"I believe the impact of the FM to Asia is limited, as Honeywell is not the main Asian supplier," one Asian trader said.

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

($1 = €0.75)

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By: Junie Lin

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