AFPM ’19: US nylon 6 to stay balanced, nylon 6,6 short into Q2

HOUSTON (ICIS)–The US nylon market will likely hold steady going into the second quarter ahead of this year’s International Petrochemical Conference (IPC), with nylon 6 supply-and-demand fundamentals balanced and persistent supply shortages predicted for nylon 6,6.

While nylon 6 supply is currently balanced, US nylon 6 producer AdvanSix declared a force majeure on phenol, which will in turn reduce caprolactam (capro) production, two key precursors in nylon 6 production. Although the force majeure is slated to last two weeks, prolonged reduction in phenol and capro supplies could cause a ripple effect and disrupt nylon 6.

Demand for nylon 6 is strong and expected to hold steady, especially as buyers who are able to continue switching away from nylon 6,6 due to persistent supply shortages.

Freely negotiated nylon 6 contracts are often tied to raw material costs, particularly benzene and capro. Late 2018-early 2019 steep declines in benzene pricing have placed some downward pressure on nylon 6 pricing. However, demand for the material has helped to offset those losses keeping free market pricing mostly stable.

Nylon 6,6 demand continues to outpace available supplies, as a series of production issues over the past 18 months have constrained production of key feedstock adiponitrile (ADN) as well as other precursors, particularly at US producer Ascend facilities.

Market sentiment indicates some producers are concerned with demand destruction driving nylon 6,6 customers to use alternative materials, including nylon 6. While shifts away from nylon 6 are taking place, special properties associated with nylon 6,6 ensures a continued customer base.

INVISTA plans to expand nylon 6,6 capacity at its Shanghai facility and will begin construction on a world-scale ADN plant in China in 2020. US Ascend is in the midst of expanding its nylon 6,6 chain in the US, which will eventually contribute to loosening supply. In the meantime, nylon 6,6 is expected to remain extremely short.

 

 ICIS formula-based nylon prices are based on a cost-plus formula involving benzene movements. As such formula-based price direction for nylon 6 and nylon 6,6 are largely dependent on benzene activity for the same time period.

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

Hosted by the American Fuel & Petrochemical Manufacturers (AFPM), the IPC takes place on 24-26 March in San Antonio, Texas.

Focus article by Manar Hindi