Europe caprolactam Jan contracts rise €45/tonne on feedstock costs

30 January 2013 23:59  [Source: ICIS news]

LONDON (ICIS)--European caprolactam (capro) January contracts have settled at an increase of €45/tonne ($61/tonne), buyers and sellers confirmed on Wednesday.

The rise was the result of a €69/tonne increase in the January benzene contract price. The full benzene pass-through was not achievable because of weak demand, sources said, resulting in another month of reduced margins for capro producers.

“Weak demand stopped further [price] increases. [We’re] already starting Feb discussions. I think February will see margin recovery,” a producer said.

Some buyers said they had settled January contracts at a more modest rise of €30/tonne because of the weak demand, and some producers said that they had achieved increases of up to €60/tonne, but neither of these levels was widely confirmed.

Several producers said that the situation is currently unsustainable, but added that they expected benzene contract prices to fall in February, based on current spot values, and were hopeful that margins could be partially restored in February.

Some producers said that they had been forced to swallow part of the January benzene increase because of competition from other suppliers.

“We are very unhappy about that situation; we don't understand why competitors do not cover benzene when we've seen customer willingness. We're optimistic Feb will see recovery as we expect lower benzene,” a producer said.

European demand is weak, with the exception of some end-use applications such as premium automotives, which are being supported by buying interest in Asia resulting from upward social mobility.

Nevertheless, some sources in the downstream nylon 6 market estimate January 2013 consumption in Europe at 20% below levels seen in January 2012.

($1 = €0.74)

By: Mark Victory
+44 208 652 3214

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