09 October 2012 16:35 [Source: ICIS news]
BUDAPEST (ICIS)--European caprolactam (capro) October contract price targets are sharply divided, players said on Tuesday.
Producers are targeting price increases of up to €50/tonne ($65/tonne) in spite of a €28/tonne reduction in the upstream benzene contract price because of the need to recover margins, they said on the sidelines of the 46th annual European Petrochemical Association Conference (EPCA) in Budapest.
Buyers are targeting price decreases of up to €100/tonne in some cases, because of weak downstream nylon 6 margins and expectations that October nylon (or polyamide) 6 contracts could decrease by a similar level.
Downstream demand is weak because of bearish macroeconomic conditions, which have reduced consumer purchasing power, particularly in the automovite market.
“The car industry in Germany is struggling now. 20% discounts on luxury cars are being given. Need for a reality call. We need prices to come down to compete,” a capro buyer said.
Luxury vehicle demand has been shielded from recession-linked decreases through most of 2012 because of high exports to China resulting from upward social mobility. Chinese growth, however, is beginning to slow and this has reduced consumption of nylon.
Expectations for 2013 demand are sharply mixed. Some players are expecting a recovery in the second half of the year based on expectations of further monetary stimulus packages in Asia and the US which will bolster exports.
“In China, there will be a transfer of power. I think they will invest to make sure of their creditability. We see 2013 has a good chance to come back,” a capro producer said.
Other players, however, are not expecting a broad recovery in demand until at least 2014.
“We don’t know that China is able to put in another stimulus. Maybe they need to focus on exports. It’s uncertain, but what is certain is that the price needs to come down,” a capro buyer said.
The uncertainty is being exacerbated by volatile raw material costs and macroeconomic conditions.
The annual EPCA meeting runs from 6-10 October.
($1 = €0.77)
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