Honeywell joins BASF in seeking price increase for nylon 6

16 November 2012 09:28  [Source: ICB]

US nylon 6 producer Honeywell has joined German nylon 6 producer BASF in seeking price increases for its nylon 6 material.

Honeywell is seeking another 8 cents/lb for its nylon 6 polymer and its caprolactam (capro) globally. Capro is a feedstock for nylon 6. BASF is aiming for an additional 10 cents/lb for its nylon 6. The current ICIS-assessed domestic price for nylon 6 injection moulding grade in bulk volume sits at $1.70-1.96/lb, down from $1.86-$2.16/lb earlier in the fourth quarter on lower costs and market demand.

The ICIS price assessment for nylon 6 is termed a domestic price and is generally less fluid than a spot price but less rigid than a contract price. Both companies have cited the higher cost for feedstock benzene as the reason for the proposed increases.

The November contract price for benzene is $4.90/gal, up by 11.4% from October. Since January, the contract price for benzene has risen by 32.4%. Benzene spot prices were well above the $5.00/gal mark in October, with a record high trade achieved at $5.35/gal FOB (free on board). The proposed price increases are to become effective on 5 November, or as contracts allow.

Demand for nylon 6 has been steady, but is projected to fall as the year draws to an end. Some market participants also believe that while benzene costs have increased, driving up costs for capro, now was not the time to seek an increase.

Buyers say demand is not strong enough to justify a price increase, especially so close to year-end. Demand typically diminishes from mid-November to the end of the year, and many market sources expect this to be the case this year.

Others also consider the price increase proposals as simply attempts to stave off any decrease in price as demand diminishes. While buyers are aware of the higher cost of benzene, which is a key building block for nylon 6, many see the announcements as an effort to hinder falling prices.

By: Wesley Busch
+1 713 525 2653

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