The end of 2009 is just around the corner, so it is usually the time of year when the major polymer producers need to reduce their material inventories. But 2009 appears to be different than most other years, with most producers not having excessive inventory that is needing to be dumped before the end of the year. Currently the NA Nylon 66 market appears to be fairly snug on the supply side, with both of the major NA producers being in a sold out position at their current polymer production levels. In addition Invista is still under force majuere due to feedstock shortages in Texas. With the increased anti-dumping duty that was imposed on Nylon 66 by the Chinese government back in July, you would think that some nylon materials would start backing up in US warehouses. But this does not appear to be the case in 2009. Based on this information I do not think that we will see a material price correction for Nylon 66 at the end of 2009. Supply is tight and material prices keep going up.
The same appears to be true for the local olefin markets as well. The polymer producers have done a good job of keeping prices up in 2009, while demand for product has been flat. They have been taking orders and running to forecast all year long, so they do not have much excessive inventory to sell off at the end of 2009. Feedstock prices have been stable in 2009, so without any unforeseen monomer disruptions, these markets should remain stable into 2010. Prime HDPE is currently seeing some demand from China, but most of the other major olefin export markets are slow. The Chinese New Year is on Feb. 14th, 2010, so the export buyers should be placing orders soon prior to the end of their year.
So based on the current level of discipline in material control from both the major Nylon and Olefin producers in NA, do not expect to see any major material inventory reductions or material price corrections (reductions) at the end of 2009.