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

17 July 2012 23:59  [Source: ICIS news]

LONDON (ICIS)--European nylon 6 July contracts have settled at a reduction of €0.10/kg ($0.12/kg) because of weak demand and lower upstream benzene contract prices, buyers and sellers said on Tuesday.

The July benzene contract price fell by €68/tonne. Nylon 6 reductions beyond this were caused by low consumption – particularly from the downstream fibre market.

Fibre production has been estimated at around 50% of capacity in what is traditionally the low season, and operating levels are being further reduced in the lead up to summer holiday outages in August.

Despite it being off-peak for fibre demand, consumption in July 2012 has been estimated at 10-20% below 2011 levels because of bearish macroeconomic conditions which have reduced consumer purchasing power.

Automotive demand is also low for small- and mid-sized vehicle production, because of weakness in the wider economy. Nevertheless, premium automotive consumption has, so far, been shielded from the effects of macroeconomic weakness. This is because of exports to Asia resulting from upward social mobility.

Nylon 6 (or polyamide 6) margins are weak, and several producers said they are considering turning down operating rates and extending August shutdowns as a result.

One producer already has a contingency plan in place to reduce operating rates to 40-50% of capacity if reductions in nylon 6 prices are not mirrored in feedstock caproalctam July contracts.

Nylon 6 players are reducing inventory levels because of concerns over rising benzene spot prices, which are trading well above July contract levels. This has led to fears of sharp upstream cost rises in August. At noon London time, benzene spot bids and offers were at $1,400-1,420/tonne CIF (cost, insurance and freight) ARA (Amsterdam-Rotterdam-Antwerp).

European nylon 6 virgin polymer contracts finalised at €2.10-2.30/kg FD (free delivered) NWE (northwest Europe).

($1 = €0.81)


By: Mark Victory
+44 208 652 3214



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