Europe April caprolactam rolls over at €2,642–2,698/tonne

11 May 2011 23:59  [Source: ICIS news]

LONDON (ICIS)--European caprolactam (capro) contract prices for April have largely rolled over from March following another month of difficult and drawn-out negotiations, producers and consumers said on Wednesday.

Pre-discounted contract prices for April settled at €2,642–2,698/tonne ($3,829–3,910/tonne) FD (free delivered) NWE (northwest Europe).

The movement in capro prices typically mirrors that of the feedstock benzene. But as the global supply of capro continues to be squeezed for the sixth consecutive month, capro prices have decoupled from the price of benzene.

The April benzene contract price decreased by €141/tonne from March. In spite of the fall, capro producers were targeting price increases in April, which is why negotiations for the current monthly contract were more difficult than normal.

Referring to the April capro contract prices, a European producer said: “At smaller accounts, we increased by approximately €50/tonne. At the larger accounts, we performed a rollover.” 

A major buyer said: “The market is in a tight position. LANXESS, UBE and Domo all have shutdowns, and Honeywell is still in force majeure [FM]. I have not concluded with one of my suppliers, but with all the rest I agreed to a rollover.”

Honeywell declared FM on capro for all contract customers effective 15 March because of difficulties obtaining phenol. Honeywell has a 375,000 tonne/year capro plant in Hopewell, Virginia, in the US.

A second major European consumer said: “[Prices are] a rollover for April. For May, nobody wants to talk about it.”

The May benzene contract price increased by €29/tonne from April, and capro producers have already said they intend to increase their prices again in May because of high prices in Asia, strong demand and limited availability resulting from planned outages.

Another producer, who had been pushing for a price increase in April, said that it was “disappointed” that it settled at a rollover.

“I was fighting hard for an increase but we finally came to a mutual agreement,” the producer said.

“Since we are in a shutdown in May and have no product, we will not be involved in [May] contract discussions,” he added.

Another buyer, who purchases capro for various downstream applications, was very unhappy that its April price rolled over, as the price of benzene dropped by €141/tonne and producers continued to use the price difference between Asia and Europe as an arguement.

“If the producers are so in love with China, they should stop complaining and do something about increasing their polymer prices,” he said.

Referring to the months of successive price increases that have been difficult to pass on to some sectors of the polyamide markets, the buyer said: “We have reached the summit of the mountain. Let’s hope we can now enjoy the view.”

Although a majority of those involved in the contract negotiations confirmed price rollovers for April contracts, a major producer had yet to confirm its April prices.

A smaller producer said that it had increased its prices by €20–25/tonne, depending on its customers starting point in March.

“We finally closed, sometimes at a rollover and sometimes at a small increase. But this was really just a correction. Everybody was asking for an increase,” said a medium-sized buyer.

($1 = €0.69)

For more on caprolactam visit ICIS chemical intelligence

By: Julia Meehan
+44 20 8652 3214

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