OUTLOOK ’18: US nylon supplies expected to remain tight amid strong demand

HOUSTON (ICIS)–The US nylon market is expected to remain tight in 2018 compared with 2017 amid sustained demand and supply issues.

Nylon 6 supplies are expected to remain tight in 2018 as both feedstock caprolactam (capro) and nylon 6 product levels recover following production hurdles experienced in 2017.

Bridgestone Canada announced that it will close its 15,000 tonne/year Firestone Textiles Co plant in Woodstock, Ontario, Canada in second half of 2018, beginning on 31 December 2017.

Meanwhile, capro producers, namely in China, are expected to continue to ramp up production in order to make up for lost inventories from mid-2017 onward associated with reduced production rates due to environmental issues. Although new plants such as Fujiam Shenyuan and Yangemi Chemical Co in China are expected to somewhat ease supply concerns for the feedstock, capro supplies are expected to remain tight through 2018.

AdvanSix also plans to debottleneck capro production in 2018, which should somewhat alleviate tight supply in the market.

However, other expansions, such as LANXESS’s 2017 acquisition of US-based specialty chemical company Chemtura in April 2017 is likely to increase the compounders demand for product for its backward-integrated engineering materials business.

Moreover, major producer BASF announced in September 2017 that it would be acquiring Solvay’s polyamide business, with hopes to close the transaction in Q3 2018. The acquisition will backward-integrate BASF’s nylon 6 production line.

Major flooring producer Engineered Floorings (EF) in the meantime finalised its purchase of major carpet producer Beaulieu America (BA), which filed for bankruptcy, in late 2017. The acquisition is likely to increase nylon 6 demand in 2018.

As such, nylon 6 supplies are expected to remain tight in 2018 due to short capro supplies and sustained demand for product in the textiles and other industries.

Nylon 6,6 supplies are also expected to remain tight into 2018, despite strong demand in the market.

Major nylon intermediate producer INVISTA’s Orange and Victoria, Texas plants were forced to shut down ahead of Hurricane Harvey in the US Gulf region in late August 2017, severely impacting supply levels in the market. Although the plants came back on line by October 2017, supply levels remain tight and are expected to remain so into 2018.

Another major nylon 6,6 producer, Ascend Performance Materials, also faced production issues further upstream in its supply chain as a result of Harvey. The producer declared force majeure on acrylonitrile (ACN), a building block for nylon 6,6 intermediate adiponitrile (ADN), at its Chocolate Bayou plant in Alvin, Texas in August 2017. As a result, nylon 6,6 and intermediates prices pushed higher in the second half of the year, with fresh increases slated for January 2018. Although the producer lifted the force majeure in November 2017, supplies levels are expected to remain snug in Q1 2018 as demand increases.

Meanwhile, demand levels remain strong with major producer Ascend announcing that it plans to increase its nylon intermediates capacity by 10-15% through 2018.

As such, the market is expected to remain snug on expectations of unquenchable demand, even as producers continue to increase production levels as they recover from Hurricane Harvey.

More broadly, a July 2017 announcement by the Chinese government informing the World Trade Organization that it would ban imports of waste plastic or “foreign garbage” for September of the same year restricted the import of scrap nylons from entering the Chinese market. This action diminished the foreign market for multiple scrap distributors and compounders in the US market, as China has been a preeminent consumer of scrap plastics in recent years, pushing prices up.

Moreover, elevated benzene prices seen in Q4 2017 are expected to soften into 2018, softening upward pressure on prices seen in the nylon and nylon intermediate market over much of 2017. As such, freely negotiated prices for both nylon 6 and nylon 6,6 are expected to remain strong, albeit somewhat steady, as feedstock prices level off and supply issues in the market steadily balance themselves out over 2018.

Major producers of US nylon 6 include BASF and AdvanSix.

Major producers of US nylon 6,6 include Ascend Performance Materials and INVISTA.