Europe caprolactam Dec contracts fall €110-120/t on weak end-uses

21 December 2011 23:59  [Source: ICIS news]

LONDON (ICIS)--European December caprolactam contract prices fell by €110-120/tonne ($145-158/tonne) from November because of weak demand and falling prices throughout the polyamide chain, buyers and sellers said on Wednesday.

Low consumption has been caused by weak macroeconomic conditions and destocking. Buyers are reducing inventories not only to reduce working capital in year-end balance sheets – as is traditional – but also to increase cash flow to mitigate the risks of the affects of a possible double dip recession.

The majority of sources are expecting an increase in demand in January because of restocking and renewed exports to Asia – although the early Lunar New Year at the end of January will see buying interest in Asia disappear in the second half of the month.

In the downstream nylon 6 market, players are expecting demand to remain weak in January because of unfavourable general economic conditions.

Caprolactam sources are in wait-and-see mode ahead of the settlement of the January upstream benzene contract, which several players are predicting will rise sharply. Producers say they will pass on the full benzene increase to preserve margins.

Buyers, however, say that producers will not be able to pass on the full benzene increase because of weakness in the downstream nylon 6 market and poor nylon margins.

December caprolactam contracts settled at a net level of €1,940-2,020/tonne FD (free delivered) NWE (northwest Europe).

($1 = €0.76)

By: Mark Victory
+44 208 652 3214

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