22 May 2013 17:00 [Source: ICIS news]
LONDON (ICIS)--European caprolactam (capro) buyers are aiming to limit May contract price increases to €20-30/tonne ($26-38/tonne) because of weak downstream demand, several said on Wednesday.
Capro producers are targeting increases in line with the upstream benzene May contract price increase of €64/tonne. They argue that margins are too weak not to pass through the full feedstock cost rise.
Consumption in May 2013 is estimated by market sources at 15-20% below the same month in 2012.
“May is more or less 15-20% down in terms of demand - because of Asia,” a capro buyer said.
This is because of a reduction in exports to Asia. Traditionally Asia is a major importer of European capro.
Nevertheless, additional capacity in Asia has meant that material previously earmarked for export is remaining within Europe.
Some sources estimate that caprolactam is structurally oversupplied by approximately 1m tonnes/year.
There was no update on the production situation at DSM's 250,000 tonne/year plant in Geleen, the Netherlands, this week. DSM declared force majeure at the plant following a fire on 23 April, a company source previously confirmed.
“I cannot recall an experience where one of the largest capro producers is out and there's no problem [on availability],” a capro buyer said.
Several players said that it was an indication of how oversupplied the capro market in Europe is that a force majeure at a major producer has not had a significant impact on the supply and demand balance.
“Obviously the capro industry won't be able to have benzene incorporated in the capro price [for May], which is surprising while having a force majeure ongoing at DSM, I think that it's Asia's absence [from buying in Europe] that's made the difference,” a capro producer said.
May contract negotiations are at an early stage. Capro contracts typically settle at the end of the month.
($1 = €0.78)
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