Europe nylon 6 June contracts fall €0.10/kg on weak demand

26 June 2012 23:59  [Source: ICIS news]

LONDON (ICIS)-- European nylon 6 June contract prices have settled at a reduction of €0.10/kg ($0.13/kg), buyers and sellers confirmed on Tuesday.

The price drop came in spite of a rise in the upstream June benzene contract price of €73/tonne. The fall was the result of weak demand.

“Let’s hope benzene prices will decrease in July, otherwise we’re going to have big problems... we could see shutdowns if these low margins continue,” a nylon producer said.

A minority of players saw reductions as high as €0.14/kg, but this was not deemed representative of the bulk of the market.

Nylon 6 (or polyamide 6) consumption is low because of bearish macroeconomic conditions, which have reduced consumer purchasing power, and lowered buying interest in the dominant downstream fibre and automotive industries.

Demand is weakest in the fibre market. Fibre operating rates have been estimated by market players at around 50-60% of capacity.

“Fibre demand is very weak, operating rates are as low as 50%,” a nylon 6 buyer and fibre producer said.

Several sources speculated that summer shutdowns – which traditionally take place in August – will be extended this year because of the low offtake.

Buying interest from small- and mid-sized automotive producers is also weak because of reduced consumer purchasing power.

So far in 2012, premium-automotive demand has been unaffected from the effects of the general economic downturn because of high buying interest in China on the back of upwards social mobility. Although some sources are now seeing signs of weakness in the premium-automotive sector, the majority of players continue to see premium-automotive demand as strong.

“We’re approaching the summer holiday period. Small- and mid-sized [car] car demand is very bad. Our info is that weakening demand is being felt in the the premium sector now as well,” a nylon buyer said.

The virgin polymer nylon 6 contract finalised at €2.20-2.40/kg FD (free delivered) NWE (northwest Europe).

($1 = €0.80)

By: Mark Victory
+44 208 652 3214

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