28 November 2012 23:59 [Source: ICIS news]
LONDON (ICIS)--European caprolactam (capro) November contract prices have finalised at reductions of €10-20/tonne ($13-26/tonne) on average, buyers and sellers confirmed on Wednesday.
Actual price falls depended on starting position. They ranged from a rollover to a fall of €25/tonne, although reductions of €10-20/tonne were reflective of the bulk of trades, sources said.
The price fall came despite a €34/tonne increase in the upstream benzene November contract price, and was the result of a €100/tonne fall in the downstream nylon 6 (polyamide 6) contract price.
Demand for capro is weak because of poor macroeconomic conditions, which have limited consumer purchasing power, coupled with destocking ahead of the year-end to reduce working capital on company balance sheets.
“[There is a] significant destocking movement ongoing on year-end, increasing the availability of product,” a capro buyer said.
Consumption is expected to remain low until the end of the year.
Some November capro contracts remain under negotiation, with players awaiting the settlement of the upstream December benzene contract price before agreeing a settlement.
“It’s a really complicated month, everyone understands the position of the other, but no-one can follow the position of the other," a capo producer yet to finalise for November said.
"Buyers are trying to get the minus €100/tonne on polyamide back from capro, but with benzene increasing the pockets of the capro, people [producers] are empty ... Let's see what happens in benzene, to transfer to capro in December is almost impossible. Hope they realise we can't swallow everything, we have no margin to do a double-swallow.”
Sources added that capro margins are slim for both buyers and sellers and any further margin erosion may result in production being halted, at least temporarily.
November capro contract prices were agreed at €1,940-1,980/tonne FD (free delivered) NWE (northwest Europe).
($1 = €0.77)
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