Price and market trends: Asia spot capro prices fall for fifth week on weak demand

19 April 2013 09:21  [Source: ICB]

Sinopec price cut has rattled the regional markets, as domestic material is now priced lower than imports

Asia's caprolactam (capro) spot prices fell for the fifth week, shedding $210/tonne or 8.4 % from early March because of weak demand amid rising domestic supply in China, industry sources said on 11 April.

On 10 April, prices were assessed at $2,280-2,330/tonne (€1,756-1,794/tonne) CFR (cost and freight) NE (northeast) Asia, according to ICIS. Trades in the key China market, as well as in the Taiwanese market, resumed after the Qingming or Tomb-sweeping holiday on 4-6 April.

Buyers in China kept their interest on bonded warehouse or prompt arrival cargoes, and had little appetite for deep-sea cargoes, market sources said.

In Taiwan, buyers had retreated to the sidelines after stocking up on deep-sea spot cargoes before the Qingming holidays.

"I have not bought any spot cargoes in the past two weeks," a Taiwanese end-user said. Chinese major Sinopec has revised its tentative capro price for the month of April by yuan (CNY) 700/tonne to CNY17,800/tonne on 8 April. The price is equivalent to less than $2,250/tonne on a CFR basis.

On 2 April, Sinopec announced its tentative price at CNY18,500/tonne, down by CNY1,200/tonne from its March offers.

Sinopec's price cut has rattled the regional markets, as domestic material is now priced lower than imports.

The domestic Chinese market is becoming increasingly competitive because of new capacities coming on stream, and this may have triggered Sinopec's move to bring down its prices, players said.

In eastern China, prices were at CNY17,300-18,100/tonne EXWH, down CNY500/tonne from the prior week, according to Chemease, an ICIS service in China.

Capro's price fall, which is expected to continue, could drag down the fragile downstream nylon chain, market players said.

Meanwhile, Asian capro buyers are disinclined to start negotiations for April contracts even though producers have cut their offers by more than $50/tonne (€39/tonne), market players said on 11 April.

A European producer was heard offering $2,500/tonne CFR (cost and freight) NE (northeast) Asia, while a Japanese producer is quoting a price of $2,525/tonne CFR NE Asia for April contract.

These contract offers are about $200/tonne higher than current spot prices, which were assessed at $2,280-2,330/tonne CFR NE Asia in the week ended 10 April, according to ICIS data.

Most buyers are reluctant to procure capro on a contract basis in view of the disappointing sales in downstream nylon (polyamide) chips sales, market sources said.

Hardly any bulk orders were generated for nylon chips in the past two months, they said.

Capro contracts for March in Asia were concluded at $2,500-2,580/tonne CFR NE Asia, according to ICIS.

Capro is an intermediate product primarily used in the manufacture of nylon 6 fibres, plastics and other polymeric materials.

Additional reporting by Angeline Zhang

By: Junie Lin

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