Asia’s capro buyers slow to start August contract discussions

01 August 2012 07:44  [Source: ICIS news]

BRISBANE (ICIS)--Asian caprolactam (capro) buyers are not in a hurry to start August contract discussions, as downstream nylon (polyamide) demand is persistently weak, buyers and sellers said on Wednesday.

This is because of the low demand summer season for nylon yarn production and bearish economic conditions, which has reduced consumers’ purchasing power, they added.

Only one major northeast Asian producer has released its August offers, at $2,350/tonne (€1,906/tonne) CFR (cost & freight) northeast (NE) Asia, $100-120/tonne higher than July settlements.

Most of Asia’s July capro contracts were settled at $2,230-2,250/tonne, down by $170-180/tonne from the previous month’s settlement.

Offers by other producers have not yet to emerged, but are widely expected to be higher due to the firming benzene costs, said market players.

Benzene prices in Asia were at $1,155-1,175/tonne FOB (free on board) Korea at noon on 1 August, up by $5-10/tonne from the previous day’s close.

“My producer told me that he understood the downstream segments are not faring well, but actually current market prices are considered to be lower than they should be, [and hence the reason for the higher offers for August],” a major northeast Asian buyer said.

Another major northeast Asian buyer said: “Why would I want to pay a $100/tonne premium for August contract over the current spot prices?”

Spot capro prices are being discussed at as low as $2,250/tonne CFR NE Asia this week as demand remains weak, traders and buyers said.

Buyers said July is not a particularly strong month for nylon sales and are not convinced that August settlements will see three-digit increases.

Capro is an intermediate primarily used in the production of nylon 6 fibres, plastics and other polymeric materials.

($1 = €0.81)

By: Junie Lin

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