Europe June capro contract price targets sharply divided

12 June 2013 17:08  [Source: ICIS news]

LONDON (ICIS)--European caprolactam (capro) buyers and sellers are far apart in their initial price targets for June contracts, and several expect negotiations to be protracted as a result, they said on Wednesday.

Buyers are targeting price reductions of up to €50/tonne ($67/tonne), arguing that weak demand and poor downstream nylon 6 margins mean a significant decrease in prices is necessary.

“For the time being I'm not moving because the demand is very long and prices are soft. I don't see why they [capro producers] have to keep money in their pocket,” a capro buyer said.

Capro producers are targeting price increases of up to €25/tonne, arguing the need to restore their own limited margins, a move which they say is supported by tight supply.

“Benzene went up €64/tonne in April to May, [and in] May to June it was down €11/tonne, meaning +€53/tonne [cost increase over the two months]. We want to compensate losses, so my target is +€25/tonne [in June capro contract negotiations],” an integrated nylon chain producer said.

Several sources on both sides of the market expect June contract prices to roll over as a compromise.

“A rollover would give some margins and stability on polymer margins - but that's only if downstream can hold,” a capro producer said.

Negotiations are at an early stage, and capro contracts typically settle at the end of each month.

There is widespread talk of a production outage at a European producer, which is expected to continue until the end of July. However, this could not be confirmed at source.

Demand remains weak because of poor macreconomic conditions. Consumption in June is as much as 25% below the same month in 2012, according to market estimates. Consumption levels are unchanged compared with May, at a low level.

($1 = €0.75)

By: Mark Victory
+44 208 652 3214

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