Caprolactam

Views on the impact of new caprolactam (capro) capacity in Asia on European demand are sharply divided.

Asia is a major importer of European capro, with the majority used in the high-grade fibre market. Several sources expect that within the next year, expanded capacity in China will lead to a reduction of import demand in Asia.

This will result in increased supply in Europe as material previously earmarked for the export market is sold domestically. Amid weak demand in Europe resulting from bearish macroeconomic conditions, which have reduced consumer purchasing power, this could result in consolidation.

Nevertheless, other players said the new Asian capacity cannot yet produce material of the required specification for use in the high-grade fibre market.

They further argue that the new Asian plants will not be able to produce this capacity for up to five years, by which time a general economic recovery may have taken place and demand increased.

Nevertheless, short-term growth prospects for nylon are weak, with most players expecting a fall in consumption in 2013 - although market conditions remain too volatile for firm predictions. As a result the timing of when the new Asian plants will be able to produce on-spec material for the high-end fibre market will have a major impact on the structure of the capro market.

Some sources believe the plants will be able to produce on spec-material by 2013, and expect a major fall in European consumption next year as a result.

Other players believe that for the Asian plants to produce on-spec material for high-end fibre use will take at least five years of development, and expect consumption to remain broadly stable with 2012 as a result.

Updated to mid-November 2012