26 September 2013 16:40 [Source: ICIS news]
LONDON (ICIS)--Utilisation rates for high-cost caprolactam (capro) producers are likely to stay around 80-85% through to 2014-15, DSM said on Thursday.
The Dutch chemicals producer said that global capro demand would continue to show stable growth, but additional capacity expected to come onstream from China and negative cash margins are likely to keep utilisation rates depressed for high-cost producers in mature markets.
Speaking at the company’s capital markets day in Vaalsbroek, Netherlands today, board member Dimitri de Vreeze said that DSM is planning to reduce its exposure to the merchant capro markets in the years up to 2015 in a bid to reduce the volatility of its operations in the sector.
De Vreeze added that the global capro market had shown strong returns in 2010-11 as a result of shortages in China, but margins declined in 2012-13 due to higher benzene prices and capacity extensions in China.
“We feel that high cost producers will have to step back, that means utilisation rate will remain at 80-85% range,” he said.
DSM added that no change in business conditions is expected for capro in the short term.
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