27 February 2013 17:59 [Source: ICIS news]
LONDON (ICIS)--European caprolactam (capro) February contracts have settled at a reduction of €25-30/tonne ($32-39/tonne), on average, buyers and sellers said on Wednesday.
The declines follow a €113/tonne drop in the upstream benzene February contract price. The full benzene reduction was not passed-through to the capro market because of producers’ needs to restore margin.
Producers had been targeting a rollover, to further improve margins. Although one producer said it had achieved a rollover, this was not widely confirmed, and most producers said that once a major producer had agreed to a reduction of minus €25/tonne in the middle of the month, they were forced to follow.
Some buyers said that they had achieved reductions of up to €45/tonne compared with January, but this was not widely confirmed.
Buyers had not accepted rollovers for February prices because of their own need to restore margins. The majority of downstream nylon 6 February contracts settled at a rollover compared with January.
Attention in the European capro market has turned to March. Contract negotiations for March will not begin until the March benzene contract price has settled.
However, producers said that they still need to recover up to €250/tonne in lost margins against benzene, and are targeting price hikes in March. Buyers are yet to set firm targets.
Between July 2011 and February 2013, the benzene contract price has risen by €286/tonne. Between July 2011 and February 2013, caprolactam contract prices have fallen by €230-290/tonne, because of a combination of weak demand in Europe caused by poor macroeconomic conditions reducing consumer purchasing power, and additional capacity in Asia reducing overseas demand. Asia is a major importer of European capro.
($1 = €0.77)
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