JAPAN DISASTER: Europe nylon 6,6 demand down by up to 30%

22 March 2011 17:31  [Source: ICIS news]

LONDON (ICIS)--European nylon 6,6 (or polyamide 6,6) demand has fallen by up to 30% because of the impact of the Japanese disaster on automotive production.

“Japan has had an effect on automotive production. We’re seeing 20-30% less demand, but it’s too early to tell what the full impact will be,” a nylon 6,6 compounder said.

The major end-usage of nylon 6,6 is as an engineering plastic in automotives.

The crisis in Japan has heavily impacted automotive vehicle and parts manufacture in the country and this is now being felt in Europe.

European car manufacturers are reliant on automotive parts sourced from Japan.

Several manufacturers, such as Renault and Volvo, have warned that component shortages resulting from the Japanese disaster could lead to major disruption in production.

Nylon players said they had already begun to see short working weeks impemented at European car plants because of a lack of materials, with more expected to follow.

“European automotives are affected by Japan. They’ve [European car plants] had to decrease their operating rates... some important parts come from Japan, it’s slowing production,” a major European nylon 6,6 producer said.

Conversely, Japan is a major exporter of finished cars. European nylon consumption has been in large part driven by exports of finished automotives to Asia during 2011.

The lack of automotive manufacture in Japan – which some sources speculated would take at least six months to return to normal, provided there are no further negative developments in the crisis – could increase Asian automotive demand in the short term, and raise demand for exports from Europe.

“If [Japanese car manufacturers] can’t produce there will be more business for us [European players]. They’re [Japanese players] more export-orientated. There will be less exports so there will be more opportunities for other countries to export,” a nylon 6 and 6,6 producer said.

The long-term impact of the Japanese disaster remains unclear, and most nylon players are in a wait-and-see position.

“We need to see how the situation unfolds. At the moment there are a lot of assumptions. What’s up in the air is how it’s going to go through the second quarter,” a nylon 6,6 producer said.

European nylon 6,6 supply remains tight, following the recent force majeure (FM) at Rhodia Polyamide.

Rhodia lifted the second of its two FMs on nylon 6,6 on Thursday 17 March, it announced in a letter to its customers.

Rhodia was initially forced to declare the FM on Wednesday 8 December because of a breakage in its ketone anone (KA) oil utility, which meant it had to stop adipic acid production. The FM was lifted on 1 March 2011.

A separate FM at Rhodia on adipontrile (ADN) and nlyon 6,6 was enacted on Friday 4 February and lifted last Thursday.

Nylon 6,6 players said that the lifting of the FM would stabilise supply, but availability was expected to remain tight throughout the second quarter.

Nylon 6,6 second quarter contract negotiations were yet to begin in earnest. Early expectations were for price rises of arround €0.30/kg ($0.43/kg), based on increasing feedstock costs and tight supply.

The majority of sources said that demand from the automotive sector remained firm, despite the up to 30% fall in offtake from the industry resulting from the crisis in Japan. Nylon players continue to monitor the situation closely.

 ($1 = €0.70)

For more on nylon visit ICIS chemical intelligence

By: Mark Victory
+44 208 652 3214

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