18 January 2011 16:36 [Source: ICIS news]
LONDON (ICIS)--European nylon 6,6 (or polyamide 6,6) contracts should be settled on a monthly rather than a quarterly basis, producers said on Tuesday.
The move away from quarterly contract negotiations to monthly contracts was because of a shift to monthly contracts in the upstream butadiene (BD) market. Nylon 6,6 can be derived from two routes, using either adipic acid as feedstock, or adiponitrile via butadiene.
“We have explained to customers that there is a structural change [in the nylon 6,6 market]. Benzene, butadiene and ammonia [upstream products for nylon 6,6] are all monthly. There’s no reason to keep quarterly prices,” one major nylon 6,6 producer said.
Several producers said the volatility of feedstock costs during 2010 had made it unjustifiable to remain with quarterly pricing.
“No-one knows anymore how the [nylon 6,6] market will develop,” a buyer said.
Buyers confirmed that suppliers were moving to monthly contracts, but some buyers were hesitating, particularly those linked to downstream automotive applications in which prices in end-use markets are slower to react due to long-term pricing strategies.
“Suppliers are thinking about monthly prices. It’s ridiculous,” a buyer said.
Producers said that the shift to monthly pricing would happen gradually.
“It doesn’t mean it [prices] will change every month. In the beginning it will be half and half [quarterly versus monthly], but we’re going in that direction,” said a producer.
First-quarter nylon 6,6 contract price negotiations were yet to conclude, but players were expecting increases of around €0.15/kg ($0.20/kg) following sharp rises in upstream benzene and cyclohexane (CX) costs. Fourth-quarter nylon 6,6 virgin polymer contracts settled at €2.55-2.75/kg, according to ICIS.
($1 = €0.75)
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