Europe capro players predict September contract price rollover

04 September 2013 23:59  [Source: ICIS news]

LONDON (ICIS)--European caprolactam (capro) buyers and sellers expect September contract prices to increase by €15-16/tonne ($20-21/tonne), reversing the August trend, they said on Wednesday.

This is because the upstream benzene September contract price settled at an increase of €31/tonne, following a €32/tonne fall in August, taking feedstock costs broadly back to their July level.

“[It’s] very early [in contract negotiations], we will ask for rollover, some suppliers will ask for full benzene. Most likely they will return to July prices,” a buyer said.

August capro contract prices settled at a reduction of €15-16/tonne.

“Because of last month, the willingness to share [the benzene contract price change] could be continued in the month of September,” a producer said.

Nevertheless, at least one capro producer is targeting the full benzene September contract price increase because of the need to restore margins.

Capro buyers and sellers are expecting low consumption in the second half of the year in spite of optimism in the downstream nylon 6 market that demand will increase. Capro players said that regardless of the bullish attitude downstream, actual order book volumes remain low.

Nylon 6 players are anticipating a spike in demand in September, with players forecasting a recovery in construction and automotive markets, driven by an improving macroeconomic situation.

Survey company Markit's eurozone purchasing managers' index (PMI) rose to 51.4 in August from 50.3 in July to reach its highest level in over two years.

Nylon players added that fibre spinning units continued to run in August this year because of high buying interest, whereas traditionally lines would be taken off stream throughout last month.

Coupled with this, additional downstream demand is expected because of restocking from the automotive sector following European summer shutdowns.

($1 = €0.76)

By: Mark Victory
+44 208 652 3214

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