European caprolactam players divided over April contract prices

18 April 2012 23:59  [Source: ICIS news]

LONDON (ICIS)--European caprolactam players are sharply divided over April contract prices and negotiations are expected to be protracted, buyers and sellers said on Wednesday.

Buyers are targeting price reductions of up to €80/tonne ($105/tonne), citing feedstock price falls, weak demand in Asia and the need to recover downstream nylon 6 margins.

Most caprolactam producers are targeting a rollover in April contract prices, although some conceded that they have no revised offers, down to a fall of €20-30/tonne, because of the need to recover margins against cyclohexane (CX) feedstock costs.

At the start of the month producers had been targeting price increases of up to €50/tonne.

“There’s been a very, very small movement [in negotiations]. Positions are very static,” a European producer said.

Asia is a major importer of European product and several sources said that material earmarked for Asia is remaining in Europe, increasing supply.

There are also renewed concerns about the eurozone crisis, leading to speculation that demand will deteriorate in May.

Asian caprolactam is trading at $2,500-2,550/tonne CFR (cost and freight) NE (northeast) Asia, an $80-130/tonne fall from the previous week because of low consumption and oversupply.

“We’re expecting price falls because of weak demand in Asia and weak demand downstream. The sentiment is that May will even see an over supply,” a caprolactam buyer said.

The April CX contract price fell by €32/tonne compared with March.

Despite CX contract prices falling in April, compared with October 2011, April CX prices are €189/tonne higher, a rise of 22%.

The March 2012 caprolactam contract price was €30-50/tonne higher than in October 2011, a rise of 1-2%

Producers further argue that caprolactam supply remains balanced-to-tight because of the recent outage at DSM’s 250,000 tonne/year caprolactam plant at Geleen, in the Netherlands.

“Buyers are asking for more capro, because of tight supply – we’re sold-out,” a producer said.

DSM has restarted its Geleen plant and is running at normal volumes following planned maintenance, a company source confirmed on Wednesday.

The plant was shut down in early-March and the restart process began at the beginning of this week. The outage was scheduled to last for five weeks, but technical problems extended the maintenance period, the source confirmed.

European caprolactam buyers counter that now the DSM outage is over they expect the market to become over supplied at the end of April/early May.

($1 = €0.76)

By: Mark Victory
+44 208 652 3214

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