Asia capro contract talks put on hold because of wide price gap

05 May 2011 11:41  [Source: ICIS news]

SINGAPORE (ICIS)--Contract discussions for Asian May caprolactam (capro) have reached a stalemate with producers pushing for a higher price increase than customers willing to pay, market sources said on Thursday.

May contract nominations were announced at $3,450/tonne (€2,312/tonne) CFR (cost & freight) NE (northeast) Asia and $3,500/tonne CFR NE Asia, respectively. This is $100-130/tonne lower than April’s settled contract prices, which were finalised at $3,580-3,600/tonne CFR NE Asia, ICIS data showed.

“Unless other sellers settle at a very low number, we won’t have an agreement before next week,” according to a major producer based in northeast Asia.

“I expect that most producers might only scale down [contract] selling ideas only by $50/tonne at most,” another northeast Asian capro producer said.

Some producers said initial offers might not be achievable as the spot capro market sentiment in Asia had dropped in recent weeks.

The pause on contract discussions is also because key market players in Japan are away on holiday this week.

One producer based in northeast Asia said the spate of outages and ongoing shutdowns in China and Japan will contribute to tighter supply in May.

Buyers were equally firm in their insistence at below $3,400/tonne CFR NE Asia, depending on source.

Demand from the downstream nylon (polyamide) industry had also been lacklustre in the last two months, sources said.

“I see little reason to price capro higher. The downstream nylon market is so weak,” a customer based in China said.

Another customer based in Taiwan said that while the product may be available, the problem lies with the fundamentally tight supply.

“But I still feel that the settled prices should not be higher than $3,400/tonne,” he said.

($1 = €0.67)

For more on capro, visit ICIS chemical intelligence
Please visit the complete ICIS plants and projects database

By: Junie Lin

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