01 November 2011 23:59 [Source: ICIS news]
LONDON (ICIS)--European October nylon 6,6 contracts settled at a fall of €0.15-0.20/kg ($0.21-0.28/kg), because of weak demand, decreasing feedstock costs and oversupply, buyers and sellers said on Tuesday.
Nylon 6,6 October virgin polymer prices were finalised at €2.70-2.95/kg FD (free delivered) NWE (northwest Europe).
Nylon 6,6 demand is up to 30% below expectations for October, sources said.
Weak nylon 6,6 (or polyamide 6,6) demand is the result of deteriorating macroeconomic conditions. Reduced consumer purchasing power has limited the demand for durable goods.
“Derivatives demand has dropped substantially.... demand is very low, 30% below expectations. It’s difficult to get credit, and because of reduced purchasing power, people are not buying,” a nylon 6,6 buyer said.
Coupled with this, volatile trading conditions have led buyers to reduce inventories and purchase on a just-in-time basis.
“Orders are being placed cautiously. Everyone is being careful at the moment because of the economic situation,” a nylon 6,6 producer said.
There is speculation that difficulties in obtaining credit lines have further weakened consumption.
Nylon 6,6 can be manufactured either using adipic acid or butadiene (BD) via adiponitrile.
October freely negotiated European adipic acid contracts have settled at a net level of €1,570-1,670/tonne FD NWE, a fall of €120/tonne from September. The drop was the result of lower upstream benzene costs weakening demand and lengthening availability.
Although some producers and buyers saw smaller drops, with one producer seeing a reduction as low as €80/tonne from September, this was not widely confirmed.
Adipic acid spot material is trading as low as €1,400-1,450/tonne FD NWE, but activity is limited because of weak demand.
Most adipic acid volumes are being covered on a contractual basis.
Low adipic acid consumption, particularly in the downstream polyurethanes (PU) market is the result of high inventory levels, and uncertainty over macroeconomic conditions. A reduction in consumer purchasing power has lowered buying interest for durable goods.
Adipic acid consumers are purchasing on a just-in-time basis and attempting to reduce stock levels ahead of the year-end in order to lower working capital.
End of year destocking – which would traditionally begin in late-November/early-December – has begun early this year as consumers look to limit exposure to any possible general economic downturn.
Buying interest is expected to remain weak for the remainder of 2011, particularly for construction and automotive-linked applications, where the fourth quarter is traditionally the low season for demand.
($1 = €0.72)
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