Chemical profile: Asia nylon

10 January 2014 09:47 Source:ICIS Chemical Business

Nylon (polyamide) comes in two forms – type 6, based on caprolactam (capro) and type 6,6, based on adipic acid and hexamethylene diamine (HMDA). Most nylon production is used in the manufacture of clothing and carpets. Nylon is also used in engineering plastics for the electrical, electronics and automotive sectors.

Supply of nylon chips in Asia is balanced-to-long with regional producers keeping their operating rates at around 80% amid weak demand conditions.

Demand for nylon yarn and textile products have been poor, largely affected by the tightening credit policy in China and a weak global economy that reduced consumption of nylon end-products. The nylon sector has also been facing stiff competition from substitutes of cheaper polyester.

Exports from China totalled at 44m tonnes from January to November 2013, a drop of 18.4% compared with the same period in 2012, according to China customs data.

Spot prices of Asia’s nylon textile chips (semi-dull) trends closely to feedstock capro prices. Prices of nylon chips peaked in February at $2,910-2,930/tonne CFR China, fuelled by increases in upstream capro prices and further supported by post Lunar New Year restocking activities from downstream nylon yarn segments. However, nylon chip prices went on a steep downtrend until late April with buyers covered their positions. Weak sales for end-products meant it took longer to digest stockpiles as well.

During the same period, upstream capro prices slumped with an expansion of domestic capacities in China.

Capro players competed on prices in a bid to capture market share. Prices of capro were slashed by an average of $270/tonne, compared with a tandem drop of $205/tonne for nylon chips.

In the second half of the year, it was difficult for nylon chip prices to recover due to persistent poor downstream performance. Prices were ranged at $2,650-2,700/tonne CFR China. Weak demand also led to reduced volatility in prices despite wider fluctuations in upstream capro prices.

Nylon 6 is made from reacting capro with water and a molecular mass regulator, such as ethanoic acid. This is heated under nitrogen to 500K. In nylon 6,6 production, adiponitrile – from butadiene (BD) or propylene – is converted to HMDA, which is then heated with adipic acid (from benzene) to form a salt.

Ethanoic acid is mixed into a solution with the salt and the mixture is heated to about 500K. As pressure develops, the temperature is raised to 540K and the steam bled off. The pressure is reduced and the polymer is extruded under nitrogen to yield a lace, which is then granulated.

Supply for nylon chips in China is set to increase with more nylon polymerization plants scheduled for start-up in 2014.

More traditionally downstream yarn ­spinning players will be moving up the nylon chain to produce nylon chips for captive ­consumption with excess output sold to the market.

For nylon chip producers, increasing capacities would help in reducing marginal costs which will allow them to compete more effectively with polyester chips on prices.

As nylon chips producers undertake an aggressive expansion phase in the New Year, China will grow to be more self-sufficient.

In addition, the implementation of anti-dumping (ADD) tariffs in 2010 have made imports into China more expensive and made it difficult for US, EU, Russia and Taiwan imports to compete on a levelled ground.

Despite the sluggish trading arena for nylon chips in 2013, some nylon chip producers are optimistic that there would be improvement in downstream nylon yarn and textile industries looking ahead as the global economy picks up pace.

By Daphne Ho