DSM's shares rise after speculation it may exit capro business

03 July 2013 12:13  [Source: ICIS news]

DSM Headquarters, GeleenLONDON (ICIS)--Shares in petrochemical major DSM rose on Wednesday following speculation that the Dutch specialty materials producer is considering an exit from the caprolactam (capro) market.

DSM's share price was up by 1.23% at 11:15 London time (10:15 GMT), going against the general trend in the sector which saw most other chemical company stocks fall.

According to an article by news agency Bloomberg on 2 June – which cited two unnamed sources with knowledge of the situation –  DSM is considering exiting capro to focus on its nutrition business. One of the sources said that the Valence Group is assisting DSM to explore its options for capro.

Herman Betten, senior external communications manager at DSM, said on Wednesday: “Firstly, we don't comment on market speculation. Second of all we have announced previously that we would look at options to reduce our exposure to the merchant caprolactam market... and we have nothing further to report following our previous public announcements.”

JPMorgan Cazenove responded to the Bloomberg article in its UK  & European Chemicals: Daily News and Events bulletin, stating that: “We would view an exit from the business as a significant positive for the shares and forecast further deterioration of global caprolactam utilisation rates in 2013/2014.”

Some European capro players have previously estimated that caprolactam is structurally oversupplied by approximately 1m tonnes/year.

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.

Capro is the feedstock for nylon 6 (or polyamide 6) which is predominantly used in engineering plastics for automobiles, and fibre markets.

By: Mark Victory
+44 208 652 3214

AddThis Social Bookmark Button

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly