03 May 2011 15:23 [Source: ICIS news]
By Julia Meehan
LONDON (ICIS)--European April caprolactam contract discussions are ongoing as producers and consumers remain divided over price ideas, market sources said on Tuesday.
“Negotiations have been tough and what I think is fair and realistic for April contracts is very different from my suppliers,” said one buyer.
“Some producers want an increase even though [the April benzene] the contract fell €141/tonne,” he added.
Producers had been initially seeking increases of up to €150/tonne ($221/tonne) for April contracts based on strong demand, tight supply and the need to close the gap between the value of caprolactam in Europe and Asia.
Sellers used the same arguments the previous month and as a result March contracts were still under discussion in early April.
However, there were some signs of agreements coming from the largest caprolactam buyers in Europe for April, although they too confirmed that not all their business for that month had been agreed.
In relation to April contracts, a major consumer said: “I got a rollover, but I am still open in some positions.”
A second major buyer also said it had agreed some of its contracts at rollovers, but that two of its suppliers were being “rather aggressive”.
“With the first two I got a rollover, but two of my suppliers are being rather aggressive. Availability is low because of maintenances at LANXESS, Domo and UBE so it will not be an easy month,” the buyer said.
Although buyers confirmed that European availability remained short, demand in downstream nylon was looking softer in May in some sectors of the nylon chain, such as weaving and knitting.
On the selling side, a major producer said it was still in negotiations for April.
“Customers want a rollover and we are pushing for a small increase.”
The producer’s aim to increase its contract price in April, despite the April benzene contract falling, was driven by tight supply, ongoing strong demand in Europe and Asia, and the high contract price of caprolactam in Asia versus Europe.
In relation to contract price discussions taking longer and spilling into the following month, the producer said: “It would be good to settle on volume and price at once and it’s [contract settlements] getting later and later because everybody is out of their comfort zone.”
($1 = €0.67)
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