FocusAsia capro to extend gains; producers not keen to raise output

22 February 2013 03:04  [Source: ICIS news]

By Junie Lin

Asia capro to extend gains; producers not keen to raise outputSINGAPORE (ICIS)--Caprolactam prices in Asia look set to continue rising in the near term on limited supply, as regional producers are not keen on boosting output so soon as their margins have just started to improve, market sources said on Friday.

On 20 February, capro prices were assessed at $2,480-2,540/tonne (€1,885-1,930/tonne) CFR (cost and freight) NE (northeast) Asia, steadily rising from late November last year, according to ICIS.

Spot prices have increased by 15.4% over the period because of tight supply amid rising cost of feedstock benzene, ICIS data showed.

Offers this week were quoted at above $2,550/tonne CFR China to as high as $2,600/tonne CFR China, but buyers are only considering prices of between $2,530-2,540/tonne CFR China, market sources said.

Capro contract prices have also been on an uptrend since December, gaining 7% to settle at $2,510-2,530/tonne CFR NE Asia for February.

A portion of March contracts were heard offered at $2,650/tonne CFR NE Asia, up by $120-140/tonne from January settlement.

“We are still losing money [based on current prices] but things [margins] are gradually improving,” said a key capro producer.

The price spread between capro and benzene has widened to $1,000/tonne this month from $738/tonne in end-November, boding well for capro producers, market sources said.

Capro prices have to be higher than benzene values by at least $1,300/tonne for capro producers to break even, industry sources said.

Benzene prices in Asia closed at $1,385-1,400/tonne FOB (free on board) Korea on 21 February, according to ICIS.

Meanwhile, capro end-users from the nylon chip segment in the key China market seem able to pass on increased costs of production to their customers, having concluded fresh sales immediately after the week-long Lunar New Year holiday, industry sources said.

Around 2,000-3,000 tonnes of textile grade semi-dull nylon chips were heard sold by a Taiwanese producer at $2,910/tonne CFR China, higher by $80-100/tonne compared with ICIS’ last assessed prices of  $2,830-2,850/tonne CFR China for textile-grade nylon chips in the week ended 19 February.

This raises capro producers’ confidence that the market will remain buoyant in the near term.

($1 = €0.76)

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections

By: Junie Lin

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