14 March 2011 09:52 [Source: ICIS news]
Correction: In the ICIS story headlined "Japan’s capro plants unaffected, feedstock shortages loom" dated 14 March 2011, please read in the 16th paragraph …Japan-origin March contracts were concluded early last week at $3,500-3,520/tonne CFR NE Asia... instead of ...Japan-origin March contracts were concluded early last week at $3,200-3,220/tonne CFR NE Asia... A corrected story follows.
By Junie Lin
SINGAPORE (ICIS)--Japan’s caprolactam (capro) plants were unaffected by the massive earthquake and tsunami, but concerns have emerged over feedstock shortages and contract deliveries, industry sources said on Monday.
Although Japan’s capro plants and are running at normal rates, they face a high possibility of feedstock shortages in the short term and may need to run at lower rates, industry sources said.
Japan’s four capro producers – Ube Industries, Sumitomo Chemical, Toray Industries Inc and Mitsubishi Chemical Corp (MCC) ¬– have a combined capacity of 525,000 tonnes per annum. The companies’ plants are located far from the epicentre of the quake and were thus unaffected.
But one Japanese producer said uncertainty remained over feedstock supply.
“We have no idea what is the step forward, given the chaos [in Japan] now,” he said.
“Should there be a feedstock shortage issue, certainly there is always the possibility we might have to reduce our operating rates,” he added.
CX is a raw material for the production of capro, which is used to make nylon. CX is produced by reacting benzene with hydrogen.
Japan, a major exporter, typically exports around 200,000 tonnes of capro per year, according to data from Japan Petrochemical Industry Association (JPCA).
As Japan is also a key supplier of feedstocks for China and Taiwan’s nylon and tirecord industry, many market players were keeping an eye on the operations of capro plants and other feedstocks.
The same Japan-based producer said: “We received several urgent enquires from our customers asking whether their contract volumes would be secure, but we really need some time to assess the overall situation. We can’t give a definite answer now.”
One major trader of Japan-origin cargoes said: “There is a huge possibility that they will procure big volumes from overseas to cover the potential [capro] shortfall, if the [Japan’s capro] plants could not run well.”
Capro supply is already tight in Asia, but industry sources based in Taiwan and China all agreed that it was too early to assess the extent of the quake’s impact on the region.
In the spot market, most market players were adopting a wait-and-see approach and were unwilling to share price ideas.
ICIS last assessed spot prices at $3,560-3,590/tonne (€2,563-2,585/tonne) CFR (cost & freight) China and $3,520-3,570/CFR Taiwan on 9 March.
Japan-origin March contracts were concluded early last week at $3,500-3,520/tonne CFR NE Asia, producers and buyers confirmed.
The 9.0-magnitude quake and following tsunami struck Japan’s northeast coast on 11 March.
($1 = €0.72)
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