The Chinese Lunar New Year (Spring Festival) is now over, and most of the businessmen have returned back to work this week. Most of the factories in China are still closed for one more week, and will not start back up until after February 16th. What will be interesting to see will be, when the factories actually start going back to work in China. This year we saw the factories closing 1-2 weeks early for the Spring Festival, and they started sending their employees home in late January. If the factories do not open back up next week, or ask the workers to come back to work soon, then this may be an indication that the Chinese economy is about to go through its own market correction.
The price of prime Caprolactam (CPL) is now trading above $3300/MT ($1.50/lb.) delivered in the Asian market. This is a historically high price for prime CPL that is being driven by Broker/Traders speculating on continued price increases for the product. The prime price of CPL is now over priced by at least $400-$450/MT, and should probably be selling more in the price range of $2800-$2850/MT in today’s market. This is why I started this blog discussing the current manufacturing climate in China. We see most of the factories in China fat with Nylon 6 inventory, which will allow them to stay out of the buying market until late February, or even early March. By the end of February most of the Traders/Brokers will be needing money, so they will start selling off their high priced CPL and Nylon 6 inventories to raise cash. The USA domestic suppliers of CPL and prime Nylon 6 resins have raised their prices to reflect the current world market conditions, but will be forced to come back to reality and lower their material prices, if the Chinese do not come back into the market by late February 2011. We expect to see Nylon 6 prices starting to soften by mid-March of this year. I would be cautious in taking a large inventory position on prime Nylon 6 in the first QTR 2011.
Several of the domestic Nylon 6 producers are selling their prime pellets at $1.40/lb. or higher for orders taken and shipped this month. Otherwise at this time it is in their advantage to flake the Caprolactam, and sell the prime CPL flake in the China market. Shaw and DSM are still priced under $1.40/lb. in the domestic market for prime Nylon 6 pellet sales shipped in February.
The Nylon 66 (PA 66) market on the other hand, continues to show signs of tightness in supply that will last until at least mid 2011. Both of the USA domestic Nylon 66 producers are in a sold out position, and are back to operating their polymer units at full capacity. Although both producers still have polymer lines idled since the slowdown in 2009, don’t expect to see an increase in domestic PA 66 capacity in the first half of this year. Rhodia is still having problems at their facility in Europe, and the Rhine River was closed for several weeks in January due to a sunken barge. Both of these factors have kept the Nylon 66 market tight in Europe, and allowed the producers to keep the material prices up in the world market. We expect to see Nylon 66 supply snug in the first half of 2011, and prices to stay at their current level or move up slightly higher. Dualloy experienced a $.02-$.03 price increase on the PA 66 wide specification and regrind materials that we purchased in January 2011 over our December 2010 material prices.
The Acrylic (PMMA) market continues to be strong in early 2011 as well. Like everything else, the price of PMMA scrap continues to increase. The latest price increase is currently being driven by the strong demand for Acetone in the Polypropylene (PP) market. As long as PP continues to sell at historic highs, expect the price of any Acetone based product to increase as well. Since you need acetone to make MMA, the backbone of Acrylic, I am sure there will be price increases announced for prime PMMA in the near future. Dualloy is currently paying over $.53/lb. in the domestic market for mixed color PMMA scrap for monomer extraction. This is the highest price that I have paid for PMMA scrap for monomer recovery since entering into the export business in 1995.
In my last blog posting I had stated wrong the price increase of $.15/lb. being announced by Ascend. Rhodia has announced a $.15/lb. price increase for prime Nylon, and I expect to see Ascend announce an increase for Nylon 66 as well. Ascend uses propylene in the PA 66 manufacturing process, and based on the recent price increases for polymer grade propylene their feedstock prices have had to increase. The recent propylene price increases have been so large, I am sure Ascend will have to pass some of the feedstock price increases on to their customers.
Announced Nylon 6 (PA 6) Price Increases:
Honeywell Jan 1st $.10/lb.
Feb 1st $.15/lb.
March 1st $.08/lb.
BASF Feb 1st $.08/lb.
Shaw Feb 1st $.08/lb.
Nylon 66 Price Increase:
Rhodia Feb 1st $.15/lb.
Nylon 6 Kettle Bottoms
Nylon 6 Depoly Residue
Nylon 6 Solidified Oligomer Waste
Nylon 6 Washwater
Nylon 6 Washwater/Oligomer Waste
Call for MOQ and current material prices.
Aged/Obsolete Virgin Pellets
Clean uniform Plastic Regrinds
Nylon Fiber Bales
Nylon 66 Semi Dull Wide Spec Pellets
Nylon 66 Dull Second Quality Pellets
Nylon 66 Textile Bright Pellets
Nylon 66 Pellets w/ up to 0.02% TiO2
Nylon 66 Mixed Color Regrind
Nylon 66 Bright Regrinds
Nylon 66 Semi Dull / Mixed Luster Regrind
Prime Nylon 6 Pellets 2.7 RV – Natural
Packaged in 1,500# boxes
Please feel free to contact me at: JamesGubera@dualloy.com