26 February 2013 16:47 [Source: ICIS news]
LONDON (ICIS)--European nylon 6 availability is increasing because of imports from the Former Soviet Union (FSU), sources said on Tuesday.
Low buying interest in Asia because of a stronger euro against the US dollar and increased domestic availability in the region has caused Former Soviet Union material which was previously earmarked for Asia to arrive in western Europe – predominantly the Mediterranean.
“With new production in Asia it's now more difficult. The majority of the material has to be swallowed in Europe - the Russian producers that used to export to Asia, now export to Europe - so there's more material,” a European producer said
Producers as well as buyers acknowledged that there has been an increase in volumes arriving from the FSU, however, some producers said that the same truck-loads being offered to multiple destinations had amplified the psychological effect on the market.
“We can confirm material coming from Russia and eastern Europe, to middle and western Europe, main direction is to Italy. We tried to get a feeling for what is really the volume. We found it's only a few lots being offered at different address, so a multiplication effect in the market,” a European producer said.
Several buyers and sellers said that consolidation is needed in the nylon 6 market because of structural oversupply caused by growth in polyamide chain production in Asia. Nevertheless, they said that the extent of the oversupply is not yet apparent, and any reduction is unlikely to take place before the end of the year.
“There's no doubt that some capacity in Europe has to be shut down, the sooner it happens the better... I think all the capacity that was going to be exported [to Asia] needs to disappear - because the market in Europe won't grow and they 'll kill also some downstream business,” a nylon 6 buyer said.
Views on consumption were sharply divided depending on downstream industry and geographical location. Demand from the small- and mid-sized automotive and fibre industries is weak – with sources estimating that consumption in February is up to 15% below February 2012 levels – because poor general economic conditions have reduced consumer purchasing power.
Nevertheless, consumption from the premium automotive sector has remained resilient to the general economic downturn, driven by exports to Asia on the back of upward social mobility.
There are some concerns that the strengthening euro against the US dollar could weaken exports of finished goods in the short term, but most sources expect upward social mobility to continue to shield the premium automotive market from the downturn in demand seen in other industries.
($1 = €0.76)
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