Europe September caprolactam settles down by €20/tonne

28 September 2011 23:59  [Source: ICIS news]

LONDON (ICIS)--European September caprolactam contract discussions have finally settled after a month of tough and drawn-out negotiations, producers and consumers said on Wednesday.

Pre-discounted contract prices for September settled at €2,6722,728/tonne ($3,660–3,737/tonne) FD (free delivered) NWE (northwest Europe). On a net basis, the contract price is €2,230–2,330/tonne.

The September settlement marks an average decrease of €20/tonne from the August contract price, which moved up by €100/tonne following a €132/tonne jump in the cost of benzene.

In September the €67/tonne fall in the value of benzene featured heavily during negotiations, as buyers wanted to recover the full benzene decrease and producers were reluctant to give any of it away.

Producers still believe the market is tight, although some concede that nylon 6 (or polyamide 6) demand has slowed.

In relation to September contract pricing, a major producer said: “We closed a large account at minus €20/tonne and we will align the rest of our contracts to that. This is my goal for the next few days.”

The producer said customers are talking about demand for nylon 6 slowing, but he felt most of this was “just talk”.

“I am hearing from customers that demand is slowing and they are remaining cautious. So rather than build stocks they will simply adjust. The question is, are people preparing for something that has not happened or is it really happening?”

On the selling side, major consumers spoke about improved availability, softer demand for October and lower benzene costs.

High caprolactam prices in Asia and strong export demand to the Chinese market continue be been a driving force for European producers in order to maintain price levels in Europe.

However, buyers continue to dispute that the value of caprolactam in Asia should have such a strong influence on the European contract number.

One major buyer said: “So, Asia is still very firm, but we are talking about two different areas here and our benchmark is Europe.”

The buyer added that availability in September had definitely improved and that this trend will continue into October.

A second major buyer, which confirmed its September volumes were agreed at an average reduction of €20/tonne, said: “With some we have a little more than €20/tonne and others a little lower.

“Availability in September is good despite the UBE problems but if you want 1,000 tonnes in the morning you might struggle to get it, but if you want 100 tonnes sellers are keen to offer.”

In Asia this week, spot caprolactam prices continued to fall on weaker demand.

($1 = €0.73)

For more on caprolactam visit ICIS chemical intelligence
Please visit the caprolactam ICIS plants and projects database

By: Julia Meehan
+44 20 8652 3214

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