Asia Sept capro contract offers $120-200/tonne higher than Aug

29 August 2012 08:06  [Source: ICIS news]

SINGAPORE (ICIS)--Asian September caprolactam (capro) contract offers and selling ideas have been discussed at $2,420-2,500/tonne (€1,936-2,000/tonne), $120-200/tonne higher than August settlements, major sellers and buyers said on Wednesday.

Offers from major capro producer BASF were heard at $2,500/tonne CFR (cost & freight) China, with its selling ideas no lower than $2,450/tonne CFR northeast (NE) Asia.

BASF said on 8 August that it will increase prices of its nylon and intermediates product lines in Asia-Pacific and the new prices will be effective from 15 August.

Prices for the entire nylon 6, nylon 6,6 and nylon 6/6,6 value chain in Asia-Pacific will increase by $200/tonne, or as ongoing contracts allow, BASF said.

Selling ideas of Japanese material were heard at $2,420/tonne CFR NE Asia, according to a major Japanese producer.

August contracts were settled at $2,300/tonne (€1,840/tonne) CFR NE Asia, $50-70/tonne higher than July, according to ICIS data.

However, buyers are not accepting the price increment, given the continued weakening in downstream demand, market sources said.

While most producers understand that weak downstream conditions are not fundamentally supporting an increase in capro prices, they said the $120-200/tonne price hike is necessary to recoup some of their lost margins in August. The producers added that if their margins remained squeezed, they might be forced to shut down their plants in the fourth quarter.

An unwelcome combination of falling capro prices and firm benzene feedstock costs caused most capro producers’ margins to be negative since this April.

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

Additional reporting by Angeline Zhang

($1 = €0.80)

By: Junie Lin

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