Price and market trends: Fewer CX producers could cause price increase: sources

18 October 2013 09:42 Source:ICIS Chemical Business

Concerns emerge as BP said it will close its German plant

Fewer European cyclohexane (CX) producers could result in a difference between the cost of downstream polyamide chain materials from cyclohexanol produced from CX and cyclohexanol produced from phenol, sources say.

Speaking on the sidelines of the 47th annual European Petrochemcial Association (EPCA) meeting in Berlin, sources throughout the polyamide chain said that fewer producers of CX in Europe could led to higher prices due to increased premiums to ensure supply.

“There will be a cost change between the phenol route [of production] and [the] CX [route],” an intergrated polyamide chain producer said.

This is because supply disruptions at a single supplier will have a larger impact on the wider market, and will mean that producers may be able to charge a premium for buyers to secure material.

[CX is] “a consolidated market [in Europe]. There’s not too many players…. What I fear is that sustainability means huge increase [in the cost of CX],” another integrated polyamide chain producer said on the sidelines of EPCA.

The concerns emerged following BP’s announcement in September that it will close its 260,000 tonne/year CX plant in Lingen, Germany, at the end of 2013 because of poor profitability. It has a nameplate capacity of 260,000 tonnes/year and is the fourth largest CX plant in Europe, according to ICIS plants and projects.

The closure of the Lingen plant follows Total’s exit from European CX production in 2012.

Polyamide chain margins have been weak throughout 2013, and there is concern that an increase in costs will further damage profitability. “The CX and capro spread has gone down to a minimum,” a third integrated polyamide chain producer said on the sidelines 
of EPCA.

Several nylon players predicted at EPCA that manufacturers will increasingly focus on specialty rather than commodity grades of nylon. Nylon demand has been weak throughout 2013.

Sources added that a move toward specialty products would also relieve competitive pressure from other lower priced plastics, and prevent substitution of nylon for other materials.

Long-term growth for engineering plastics is strong because of plastic parts increasingly replacing metal in automotives to lightweight cars and reduce carbon emissions. Specialty grades are more commonly produced using the CX route rather than the phenolic route.

By Mark Victory