LONDON (ICIS)--The collapse of the nylon market in Europe is expected to continue until the end of the year, due to the negative pressure on its main end-use sector, automotive.
The European automotive industry accounts for more than 90% of total regional nylon demand and its downturn has hit hard.
According to ICIS analysis, nylon demand in Europe will fall by 22% from 2019 to 2020, as a result of the coronavirus. There are no signs of recovery for the sector.
Nylon end-buyer demand is low, new vehicle stocks are high and many auto producers continue to run at severely reduced rates. ICIS forecasts that the European automotive industry will continue to be impacted by the crisis next year, with a decrease of ~5% in demand between 2019 and 2021.
Following the drop in automotive demand, ICIS expects nylon capacity utilisation rates to be reduced from 80% in 2019 to 62% in 2020. A resurgence is expected in 2021, although plants will not go back to normal rates and European utilisation is expected to reach only 72%.
For a relaunch of the automotive sector, which alone represents 7% of European GDP, the economy must be supported by stimulating buying interest for both private and commercial vehicles.
The boost in this end-use demand market will increase nylon capacity utilisation rates in countries that are safeguarding jobs and investments. Incentives for purchases and for investments are increasing in the major European economies, Germany, France, Spain and Italy.
Now, governments are focusing their efforts on scrapping the oldest vehicles and on encouraging the purchase of electric and less polluting cars. The purpose is to stimulate as much as is possible the return of consumer interest and the purchase of greener vehicles.
ICIS expects that the restart of the automotive sector will act as an engine for general economic recovery due to the significant impact on employment, which is reflected in a chain of related sectors, notably in the nylon market.
A full recovery for nylon, however, is not expected until 2022-2023 with a final rebound in demand of about +6%.
Insight by Valentina Cherubin