FocusTaiwan unlikely to import new China capro output in next 2 yrs

07 March 2013 11:54  [Source: ICIS news]

By Junie Lin

CHONGQING, China (ICIS)--Taiwan is unlikely to import caprolactam (capro) from neighbouring China, which is expected to struggle with an oversupply of the material, market players said on Thursday.

China is expected to welcome more than 900,000 tonnes/year in new capacity in 2013 alone – higher than the 525,000 tonne/year increment last year that brought the country’s total capro production to 11.2m tonnes/year, according to ICIS data.

But given the current weakness of the world’s second biggest economy, its domestic market may not be able to absorb this strong capacity expansion, requiring China to export the excess. Taiwan as its nearest export market, however, will not be able to take in China's new capro supply, industry sources said.

Taiwanese nylon producers are not ready to import capro from the new producers in China just yet, as they require high-grade material, industry sources said at the sidelines of the 11th China International CPL (caprolactam) & PA (polyamide) Market Forum 2013 in Chongqing.

Taiwan’s sole capro producer – China Petrochemical Development Corp (CPDC) – has also completed building a new 100,000 tonne/year line at Toufen in Miaoli County to serve the domestic market. Upon start-up of the new line, CPDC’s nameplate capro capacity will increase by 25% to 400,000 tonnes/year.

It makes more sense for Taiwanese nylon chip makers to procure domestic capro in molten form, which are easier to process. Capro imports are usually in flaked form and will need to be melted, thus translating into higher cost of production for nylon chip makers, industry sources said.

Ready availability of high-grade material from the US and Europe will also deter Taiwan from importing from new Chinese capro producers, they said.

“Taiwan nylon chips producers specialise in high-speed spinning nylon chips and requires high grade capro,” said a key Taiwanese nylon maker.

US and European producers such as German BASF and Dutch DSM, would be more willing to sell to Taiwan, where they are not required to pay antidumping duties (ADDs), than to China, which charges ADDs ranging from 4.3% to 25.5% on imports, industry sources said.

New capro producers in China may take up to two years to improve the quality of their output to meet the specifications of Taiwanese nylon chip makers, industry sources said.

Currently, the output of new capro producers in China is only suitable for applications such as tyre cords and normal speed spinning chips, they said.

But given China’s geographical proximity to Taiwan, capro trades are bound to happen as soon as the new Chinese producers’ output meets the specifications of Taiwanese nylon chip producers.

“It is just a matter of time,” said a China-based nylon chip producer.

Taiwanese nylon makers include Li Peng Enterprise, Formosa Chemicals Fibre Corporation and Zig Sheng Industrial Co.

Additional reporting by Angeline Zhang

By: Junie Lin

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