19 September 2012 23:59 [Source: ICIS news]
LONDON (ICIS)--The European September caprolactam (capro) contract price has rolled over from August, as producers try to maintain a level of margin and buyers refuse to pay more for their September volumes, market sources said on Wednesday.
The September contract was agreed at €1,965-2,025/tonne ($2,552-2,630/tonne) FD (free delivered) NWE (northwest Europe), a rollover from August.
In relation to the settlement, a major producer said: “In almost 90% of cases we rolled over our contracts. Of course buyers wanted the full benzene [reduction] but they were realistic and knew it was not possible.”
The September benzene contract price decreased by €35/tonne from the previous month.
Capro buyers had been pushing for this full €35/tonne reduction to be passed on because demand was not so strong and they too were trying to gain, or at least maintain, some level of margin.
Producers also spoke about the the high price of ammonia, another raw material used in the production of caprolactam.
“Ammonia is now very expensive,” said a producer.
Another major producer also confirmed it settled most of its contracts for September at the same level as August.
“I settled around a rollover, but my feeling is that benzene will be much higher in October.”
Although prices have rolled in most instances, another European supplier said it was pushing hard for a €70/tonne increase and that it had not closed any contracts yet.
“We did not agree and we did not close. We know some co-producers are not doing this but we went into September with plus-€70/tonne to regain margin. We only got €30-40/tonne in August and we need to catch up and want another €70/tonne. Benzene is increasing every day,” the producer said.
The August benzene contract settled at an increase of €108/tonne.
On the buying side, capro consumers confirmed that some accounts were still under discussion, but in most instances buyers said their prices were steady this month.
“We are still discussing but I got three deals, one with a slight reduction of minus five, minus 10 and some positions at a roll over. I was asking for the full benzene,” a large buyer said.
The buyer added that there was no shortage in Europe at present.
Another large buyer said: “Until today I have closed September at a rollover, with one contract still left to go. Demand in Europe is really weak and it’s hard to predict a good fourth quarter.”
A third, small buyer also confirmed that its September contracts had rolled over.
“Capro has to be a rollover, they [the producers] get something in their pocket and we try to improve downstream, we need margin improvements and so do the capro guys. We’ve agreed a bulk at a rollover.
“Demand does not look good when you see that the car guys are giving away as much as 30% discounts and reducing volumes by 30% too,” he concluded.
($1 = €0.77)
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