Global Market Outlook on Nylon

  • The overall nylon 6,6 market was hit quite heavily in late 2017 in light of the Hurricane Harvey and the shutdowns and FMs that followed . Moreover, during December 2017 to February 2018, the cold weather had forced major suppliers of feedstock, intermediates and nylon to shutdown their unit
  • Hence, even before the market could gradually rebound to pre-Harvey levels, the new year began further tightening the market. Increased levels of downstream demand assisted the market to move to a tight scenario for H1 2018

Polyamide (PA) Market Dynamics

  • The continued supply limitations from BASF  (Ludwigshafen) , Solvay (St. Fons)  and Radici (Novara) are still contributing to overall PA  6,6 shortage on a  global scale. The recent FM by Ascend had contributed t the concerns of further declines in supply levels as well
  • Concerns of supply tightness had arisen, especially in Europe and the US and Caprolactum capacity rationalizations due to force majeure and shutdowns, and  ongoing environmental regulations in China respectively

PA 6

  • PA  6 contributes to the largest overall capacity and demand share
  • Automotive (interiors, exterior, textiles) is the major demand demand driver and would likely to drive the market on a strengthened note in the future
  • Films and coatings for flexible packaging with higher shelf life such as meat packaging etc is another major driver
  • Low cost PP, PE and PVC packaging are some of the competitors in this sector
  • PA 6 in the industrial sector goes into parts of motors, cords, generates, fishing nets, yarns and threads etc.

PA 6,6

  • PAA 6,6 is largely used as engineering plastics that has gained momentum from the top three end- use sectors
  • The continuous growth from these sectors combined  with limited supply when compared to PA 6 has led to suppliers revamping up production capacities
  • PA 6,6 as industrial l uses come under hardware components, tool housings, Lacrosse Head etc.
  • connectors, relays, switches are some the major end uses of PA 6,6 in electrical/electronics sector

Cost Drivers: PA 6,6

The major price drivers with high impact on PA  price sentiments are the trends in benzene and Adipic acid prices and supply-demand fundamentals

Raw material prices

  • The immediate raw materials that affect the prices are Adipic Acid and Benzene.  Benzene price movements and PA 6,6 price movements have a strong correlation
  • For example, even with ongoing supply limitations in the PA  6,6 market, shortage in product volumes as well as recent FM declaration by major player Ascend, the US PA  6,6 prices dropped by 1.3% impacted strongly by the sharp decline in feedstock benzene prices

Supply-Demand Fundamentals:

  • The market fundamentals such as supply levels and demand sentiments are strong price drivers as 2018 began with FMs from various PA 6,6 value chains that impacted product availability even into Q3 2018 especially in Europe.
  • For example, with the continued  production issues and associated supply tightness along with increase in feedstock benzene prices and firm demand trends, PA  6,6 prices in Europe  rose by ~3 percent during July. PA 6,6 prices have risen continuously in 2018 leading to all time highs
  • The shortage has also driven up the demand as most buyers are not able to procure required volumes. The planned turnaround by Radici would dampen the supply as well . Hence, the peak summer in Europe, which is traditionally a lull in business would not apply to the PA 6,6 market

Regulations/Macro Economics/Secondary fundamentals

  • With the ongoing global PA 6,6 shortage, the buyers are looking into substituting PA 6 wherever possible which has driven up the sentiments in the PA 6 market as well
  • The market sentiments have also been wary of the ongoing US-China trade escalation of which now PA is a part. In such cases, the purchasing momentum may take a side seat as buyers wouldn't want to engage in uncertain buying activities
  • In Europe, with suppliers facing disruptions from early on set of issues, the  rail strike  had led to difficulties  in efficient restocking activities and procurement of new material

Price Dynamics – The US

Price Overview:

  • In February 2018, nylon prices in the US continued to be impacted by lower benzene prices in the midst of ongoing supply limitations and improving demand levels to portray a very marginal decline  of 0.7 percent. Benzene prices decreased by 3 percent M-o-M during February 2018. The supply eased in the market  as output from most refineries improved in the region

Price Outlook:

  • The nylon market has been impacted by the tightness arising from the FMs and production issues at the supplier base. The US nylon market is likely to portray strong supply-demand dynamics that would be favorable for prices hikes in the short-term
  • After a month of shutdown, Ascend Performance Materials is to have lifted the FM that was declared in January 2018 at their hexamethylenediamine (HMDA) unit in Alabama