LONDON (ICIS)--The European caprolactam (capro) markets continue to face upward pressure in November from the double-digit increase in the price of feedstock benzene, good demand and tighter supply due to an outage at a capro facility in Belgium.
Capro contract price negotiations for November are ongoing in the European market, with some settlements finalised with an upward movement already and others expected to close later this week.
Following severe demand destruction during the first coronavirus lockdowns and a three-digit fall in the capro contract price in April, capro values have been gradually picking-up, albeit at a slower pace than the upstream benzene, as supply continued to outstrip demand. The market has become more balanced in September and October.
Capro demand continued strong in nNovember, supported by robust buying interest for downstream nylon 6 and reduced supply of both capro and nylon 6 in Europe, due to a force majeure at LANXESS' plant in Belgium, which remains in place since 30 October.
By the middle of the month, many European capro producers had sold out for November, some have largely allocated December volumes, and now the focus is turning to planning for Q1 2021.
Demand for downstream nylon 6 continues strong, especially from the engineering plastic sector, mainly used in the automotive industry. Some car manufacturers are determined to continue output at good levels through the remainder of 2020 to make up for the slow first half of the year, despite the apparent slowdown in the number of new car registrations.
Demand for yarn, fibres and household applications - as well as nylon films for food packaging - is also steady for now.
However, some players are a little more cautious when it comes to projections for the textile industry, expecting that the second wave of coronavirus restrictions could result in demand weakening for this application more than others, which could become more visible upstream in Q1 2021.
For the time being, however, market sentiment continues rather upbeat, regardless of tougher coronavirus restrictions in Europe and all factors point to short-term support for the European capro prices with more uncertainty looming over the early part 2021.
Capro is used to make nylon 6 fibres for textiles and carpets, and engineering plastics for electronics and automobiles.
Front page picture: Workers complete a car at
an assembly line in Germany
Source: Jens Meyer/AP/Shutterstock
Focus article by Marta Fern