27 February 2013 18:09 [Source: ICIS news]
LONDON (ICIS)--European caprolactam demand is expected to increase in March, several sources said on Wednesday.
Caprolactam demand year-to-date has been 10-15% below 2012 levels for the same period, the majority of players estimate.
Nevertheless, actual demand levels are highly dependent on geographical location and end-use, and many sources feel that demand in the second half of February has been recovering, and they expect strong consumption in March.
Forecasts of demand recovery are based on several factors. Firstly, March is the beginning of the peak-season for the textiles industry.
Secondly, stockpiles are low because buyers have been purchasing on a just-in-time basis because of a combination of working capital concerns and uncertainty over macroeconomic conditions. Low inventory levels will magnify the impact of the peak-season in textiles.
Thirdly, high benzene prices in Asia and restocking following the Lunar New Year, plus tight supply in the region, are expected to increase buying interest for European material, thus increasing exports.
Nevertheless, Asian demand is currently low because a narrow spread between spot and contract prices has meant buyers are not willing to stockpile spot material, sources in the region said.
There are also concerns in Europe that the strong euro against the US dollar will suppress Asian interest in imports in the short-term.
($1 = €0.77)
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