Caprolactam (Capro) and Nylon 6 (PA6) prices are softening in the Asia/China Markets

The price of prime Caprolactam (Capro) is finally starting to soften in the Asian market. Over the past two weeks we have seen Capro soften in price by $200/MT, and the price has continued to soften even more this week as well. Last week Capro was selling in China in the $3430/MT price range and falling. I have just returned from spending the past two weeks in China traveling to see our Nylon 6 customers, and the Asian market is definitely starting to show signs of slowing. The slowdown in Asia is being caused by a combination of the following factors. One the China Government is tightening credit in the private sector by increasing the interest rate that their Banks are now charging. The Second factor contributing to the current slowdown is that China Government has increased the cash reserve that the local Banks must hold, which is making it harder for some of our customers to access the funds that they have on deposit that is used to pay their normal operating expenses. The third factor is that the current feedstock and material price increases are supply driven and not demand driven, so most of our customers have just simply stopped buying material.

The recent Capro / Nylon 6 (PA-6) price increases are being driven by the plastic traders/brokers speculating on the PA6 market price continuing to go up month after month. I think that speculative profit taking without sales being driven by demand is over for the time being. Anyone that has product on the water to Asia should get ready for a downward price adjustment. Based on the Capro supply disruption from the tsunami in Japan, and the fact that Honeywell’s Capro plant in VA has been down for almost a month, you would think that both Capro and PA6 prices would continue to rise. But they are not, Capro / PA6 prices are actually starting to soften even with the current supply outages that I previously mentioned. Based on the current soft market conditions get ready for additional price softening for both products.

Basic chemicals and feedstocks are softening across the board in China. This should lead to all plastic material prices softening in the Asian markets. I cannot speak about what is going to happen with material prices in the USA, because our domestic supply is being manipulated by the US polymer producers keeping supply tight in this country. I realize that by only having a few large producers for each type of polymer those markets will achieve a better economy of scale, but the down side is once they start manipulating (tightening) supply we are all paying higher prices for the goods that we are buying. Unfortunately the capital investment that it takes to enter into the chemicals market is so great don’t expect to see any new players in our domestic basic chemicals markets in the near future. Personally I thought this is what we had anti-trust laws for in America.

That is why I say, that as much as we like to hate Asian suppliers it will be cheaper plastic from the Middle East and China that will finally bring true competitiveness back into the USA polymer markets. Why is prime PP selling in China for $.63/lb. at this time, when the price in the USA for the same prime PP material is well above $.90/lb.? Please feel free to send me an email and tell me if I am wrong.

Dualloy currently has the following Nylon 66 (PA66) and Nylon 6 (PA6) materials for sale;

Nylon 66 Bright w/HS Wide Spec Pellets

Nylon 66 Semi Dull Wide Spec Pellets

Nylon 66 Dull Second Quality Pellets

Nylon 66 Off-GradeTextile Bright Pellets

Nylon 66 Off-grade Pellets w/ up to .02% TiO2

Nylon 66 Mixed Color Regrind

Nylon 66 Bright Regrind from Lump/Chunk

Nylon 66 Semi Dull / Mixed Luster Regrind

Prime Nylon 6 Pellets 2.7 RV - Natural

Packaged in 1,500# boxes

Dualloy Sells the following types of Nylon 6 Polymer production waste.

PA6 Kettle Bottoms

PA6 Capro Residue

PA6 Solidified Oligomer Waste

Call for MOQ and current material prices

Dualloy purchases / sells plastic resin and polymers in the following forms.

Aged / Obsolete Virgin Pellets

Wide Specification, Off-grade Pellets

Clean uniform plastic regrinds

Reactor Lumps/Chunks/Patties

Nylon Fiber Bales

Please feel free to contact me at: JamesGubera@dualloy.com

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Nylon 66 Plastic Sales

Nylon 6 (PA 6) Plastic Sales

Nylon 66 Plastic Recycling Company

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Caprolactam (Capro) reaches $3620-$3630/MT in Asia /China Nylon 6 Market

The price of prime Caprolactam (Capro) is now trading above $3620/MT ($1.642/lb.) delivered in the Asian market for April shipments. This once again is a historically high price for prime Capro that is being driven by the supply disruption in Japan, along with Honeywell’s, Hopewell, VA Capro plant being down due to a shortage of material feedstock. Honeywell has declared force majeure on Capro due the supply chain disruption caused by Sunonco declaring force majeure in cumene. Cumene is the feedstock used to make Phenol, which is then used to make Nylon 6. This of course is not good for the average prime Nylon 6 buyer, because this situation is pushing the price of prime material at $1.55/lb. or higher in the USA market. Most domestic Nylon 6 producers are getting the higher prices that they are demanding for prime pellets, or else the will just flake the Capro and sell the material in the Asian market.

I think that the Nylon 6 prices will only stay elevated as long as there are problems in the feedstock supply chain. We are seeing the shops in China starting to slow down once again, due to a slowing market, and the Central Government’s tightening of the money supply and credit in China. Their housing market is out of control, and will have a price correction in the not too distant future. The Chinese Central Government does not want to see their housing market collapse like ours did starting in 2008. So they have increased their interest rates on home loans to slow down the speculative growth in their domestic housing market. At the same time the Central Government is making the Banks maintain a healthy cash reserve that is impacting the average company’s ability to borrow money and pay their bills.

In China most business is done on a cash basis. Our customers come to inspect the Nylon 66 and Nylon 6 materials in our warehouse. Then they pay cash for the material that they are buying, and send their truck in to pick up the material. Now some of our customers are having trouble getting THEIR CASH out of the Bank of China to purchase material, because the Banks are holding the customers money so it does not go below the set cash reserve. So with the money supply getting tighter in China, as business is starting to slow down again, Nylon 6 prices will fall once world Capro production ends the current force majeure supply situation. The price of Nylon 6 is over heated in today’s market, and should correct once Capro supply returns to normal due to the slowing market in China and the world.

The Nylon 66 market still shows no signs of softening at this time as well. Both of the domestic PA66 producers are sold out, and material feedstock prices only seem to keep going up. The price of reactor grade Propylene is up again in April, so this should drive up Ascend’s price for Nylon 66 feedstock. With both domestic producers in a sold out situation I don’t see the price of PA-66 softening any time soon.

When are the price increases going to stop? Once the US economy goes into anther tail spin? When the price of prime Polypropylene Homopolymer gets to $.93/lb. or higher for truck load quantities something is out of line here, or am I the one that is missing something. Two things are going to happen with today’s current plastics market. One - The major polymer producers are going to drive the price of materials up so high that it is going to slow the growth in our domestic economy. Two – The current high prices for plastic feedstock / polymers is going to open the door for more Asian imports of plastic into the US market. We all must not forget when ABS was $1.50/lb. or higher in the USA until Chi Mei entered the game. Then is seems that the price of prime ABS went down to around $.90/lb. for prime ABS resin from Taiwan. Everyone likes to hate the Asian producers for low prices, but their imports will force the US domestic polymer producers prices down to come in line with the world market.

Dualloy currently has the following Nylon (PA6) and Nylon 66 (PA 66 materials for sale:

Nylon 66 Bright w/HS Pellets

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

Dualloy sells the following types of Nylon 6 Polymer waste.

Nylon 6 Kettle Bottoms

Nylon 6 Depoly Residue

Nylon 6 Solidified Oligomer Waste

Call for MOQ and current material prices.

Dualloy purchases/sells plastic resin and polymers in the following forms.

Aged/Obsolete Virgin Pellets

Wide-Specification Pellets

Clean uniform Plastic Regrinds

Reactor Lumps/Chunks/Patties

Nylon Fiber Bales

Please feel free to contact me at: JamesGubera@dualloy.com