OUTLOOK ’20: Europe nylon, capro demand to remain weak until automotives improves

LONDON (ICIS)–The European nylon 6, nylon 6,6 and upstream caprolactam (capro) markets are expected to remain weak on low buying interest until consumption in the main downstream automotive sector improves.

The automotive sector has experienced a slowdown throughout 2019 due to car manufacturers halting production in order to reduce inventory levels and move toward more sustainable car models.

Therefore, increased buying interest in automotives is the key topic for 2020 and the main driver for recovery in the nylon and capro markets.

Market players are uncertain regarding when demand could pick up in 2020, with some players expecting a stronger Q1 2020 driven by restocking after the quiet Christmas and New Year holiday period at the end of 2019.

Meanwhile, other players expect improvement could be more likely in the middle or second half of 2020, with Q1 expected flat and similar to Q4 2019.

Players also anticipate any improvement will be dependent on the recovery of confidence in the market and regarding global political concerns.

There is also a lot of uncertainty for 2020 due to international trade disputes between the US and China, and the European economy, as well as some concerns about Brexit in the UK and its impact, as well as other macro-economical factors.

European business could be impacted by the UK prime minister Boris Johnson’s plan to leave the EU by 31 January, and in addition there will also be an election in the US in November 2020.

As a result of lower demand across 2019, both nylon and capro markets have become oversupplied, regardless of any plant shutdowns, and this has increased competition to sell volumes.

Lengthy supply is expected to continue into 2020 and remain widely available from Asia and Russia as well.

For nylon 6,6 in particular, supply should improve in 2020 due to upstream adiponitrile (ADN) capacity expansions at the Butachimie plant in France, the largest global producer of ADN. Nylon 6,6 supply has been tight since 2018 due to production issues and force majeures, but supply gradually improved throughout 2019 as lower automotive demand left more material available.

The Butachimie site has undergone planned maintenance in Q4 2019 to increase capacities from January 2020.

Nylon 6, also called polyamide 6, is mainly used in fibre and engineering polymer applications. Nylon fibres are used in apparel, carpets and home furnishings. Nylon engineering resins are used in automotive parts.

Nylon 6,6 also called polyamide 6,6, is mainly used in engineering plastics and industrial filament applications. Nylon 6,6 is a general-purpose extruded grade engineering resin and it is used for car parts in the automotive industry.

Capro is used to make nylon 6 fibres for textiles and carpets, and engineering plastics for electronics and automobiles.

Focus article by Stephanie Wix

Front page image: China Automotive Cars – Jan 2015. Photo by Wu Hong/EPA/Shutterstock