FocusEurope polyamide chain spread against CX rises in 2013

24 October 2013 12:59  [Source: ICIS news]

By Mark Victory

LONDON (ICIS)--European polyamide chain spreads against feedstock cyclohexane (CX) have seen significant recovery so far in 2013, according to ICIS data.

CX contract prices have fallen by €219/tonne ($300/tonne) since the beginning of 2013. The monthly CX contract price is comprised of the sum of the monthly benzene contract price and the CX quarterly delta contract price.

During the same period, adipic acid (ADA) contract prices have increased by €65-80/tonne. Nylon 6 and 6,6 (or polyamide 6 and 6,6) virgin polymer prices are at the same levels as they were at the start of the year, while caprolactam (capro) contract prices have fallen by €67-85/tonne. This represents a contract price spread recovery against CX across 2013 to date of €284-299/tonne for ADA, €219/tonne for nylon 6 and 6,6, and €134-152/tonne for capro.

Producers throughout the polyamide chain have been complaining of low margins since 2011, when poor macroeconomic conditions meant that feedstock cost spikes could not be passed through to the market. Spread levels have now seen significant recovery.

For ADA, which has seen the strongest recovery, tightening supply because of plant outages has helped overcome weak demand in 2013, allowing producers to recover some margins.

Solvay Polyamide & Intermediates' shutdown at its 300,000 tonne/year ADA plant in Chalampe, France, is proceeding to schedule, a company source confirmed on Wednesday. The company announced in a press release on 4 October that the shutdown was due to begin. The plant has been shut down until December for an upgrade to reduce the plant’s carbon emissions by 11,000 tonnes/year and will reduce energy consumption by eight megawatts/year. Once the upgrade is completed, part of the capacity is expected to remain temporarily offline depending on demand.

NF Trading has cancelled the restart of its 30,000 tonne/year ADA plant at Severodonetsk in Ukraine, a company source previously confirmed. The reasons for the cancellation could not be confirmed with the source at the time of writing. The company had planned to restart the plant – halted in December 2011 – before the end of November this year. It had originally been scheduled to come back on stream in March 2012, but continuously weak margins have led to it remaining offline.

NF Trading suspended production at its second Ukrainian ADA plant, in Rivne, at the beginning of May 2012. There are also no immediate plans for a restart at this second plant.

In late February, BASF suspended a line at its 260,000 tonne/year plant in Ludwigshafen, Germany. Initially this was for maintenance but poor trading conditions have resulted in an extension of the outage until downstream demand improves, a company source previously confirmed. There was no update on the production situation this week.

For nylon, although demand for some applications such as textiles remains weak, demand from premium automotives has remained firm. Premium automotive consumption of nylon is concentrated in northwest Europe – which is the region ICIS assess contract prices for – allowing some margin recovery in 2013. Premium automotive demand has been fuelled by exports of finished goods to Asia – in particular to China – because of upward social mobility. In southern Europe, demand has been weaker because of poor macroeconomic conditions.

For capro, exports to Asia in recent months have allowed some recovery against feedstock costs. Capro export demand had been expected to dramatically reduce in 2013 because of new capacity in Asia. However, exports have remained firm throughout 2013, which several sources have attributed in recent weeks to problems starting up production at new Asian plants. Asia has traditionally been a major importer of European capro.

EU capro exports rose by around 7% in August compared with the same month in 2012, despite the new capacity in Asia, according to data from official statistics agency Eurostat.

Capro exports in July from the EU were also 7% higher than the same month in 2012.

($1 = €0.73)

By: Mark Victory
+44 208 652 3214

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