Polyamide chain uncertain of peak season in 2013

07 March 2013 17:30  [Source: ICIS news]

LONDON (ICIS)--Demand in the European polyamide chain is not expected to improve in the first half of 2013, and there may not be a peak-season this year, several sources said this week.

Players in the nylon, caprolactam (capro) and adipic acid (ADA) market all said that weak macroeconomic conditions and volatile exchange rates make it unlikely consumption will see a significant increase in at least the first-half of 2013.

“Peak season - I don't see it happening,” an ADA buyer said.

Weak macroeconomic conditions have limited consumer purchasing power, reducing consumption in the major end-use automotive and fibre markets. Automotive demand so far in 2013 has been estimated by market players at up to 15% below the same period in 2012.

March would typically see the start of the fibre season and the approach of the peak-season in automotives, but negative economic sentiment has meant consumption is showing no signs of an increase in these sectors at present.

“With the exception of the German car industry nothing's moving. My market's not increasing. I have a feeling that it's [2013 peak-season] not going to be a good moment,” a nylon buyer said.

Sources said Asia, in particular China, remains an unknown quantity, and that export volumes of finished goods to the region could determine demand levels in the first half, but added a recovery in Europe is not expected.

A nylon and adipic acid producer forecast 2013 consumption to be anywhere from flat with 2012 levels to a fall of 10%, depending on Asia.

An increasingly volatile euro/US dollar exchange rate has helped limit exports of finished goods as overseas buyers are unwilling to purchase from Europe because of uncertainty over the true cost of materials when they land.

Sources are most bearish in the nylon market, while views on ADA consumption are more divided.

Some ADA players are seeing an increase in buying interest, which they attribute to the approach of the peak downstream fibre and automotive seasons in the second quarter.

Players said it is too early to estimate March consumption. Nevertheless, one source said that it is typical to see a 20% increase in March consumption compared with February. Most sources across the polyamide chain estimate demand is flat with February.

“Compared with February its peak-season, 20% [increases in month-on-month demand] is traditional - this year I could not say it,” an ADA and capro producer said.         

Coupled with this, those players seeing increases in ADA consumption said that this might be caused by global production outages rather than an underlying increase in demand.

“What we see is the demand situation is improving, which could be a sign other producers reduced [their outputs],” a polyamide chain producer said.

BASF halted production at one of its ADA lines in Ludwigshafen, Germany, for maintenance, a company source previously said.

The maintenance will take off line approximately 25% of the plant’s nameplate capacity of 260,000 tonnes/year. The line will be brought back on stream in June. There was no update on the production situation this week.

China’s Shandong Haili Chemical Industry is keeping its 150,000 tonne/year ADA plant in Jiangsu province off line because of a power outage, a company source said on 6 March.

The plant was shut on 2-3 March, the source said, adding that the plant is expected to be restarted soon.

There were also rumours of production problems in the US, but these were not widely confirmed.

Overseas production outages have reduced import volumes into Europe and increased export demand.

Although some European sources said the outages were not enough to overcome the 130,000 tonne/year estimated oversupply in the market, other players said that supply in the short-term is likely to be tight.

The exception in the polyamide chain is the cyclohexane (CX) market, where players are seeing strong volumes in spite of weak margins downstream.

As with ADA, however, stronger demand has been attributed to global production outages limiting supply. 

($1 = €0.77)

By: Mark Victory
+44 208 652 3214

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