Asian caprolactam-benzene spread hits 30-month low of $1,237/mt
Dated- 22 Jun , 2012 - Global
The price spread between caprolactam and feedstock benzene narrowed $42/mt, or 3.3%, week on week Thursday to reach a 30-month low of $1,237/mt amid dismal downstream demand, Platts data showed.
The last time the caprolactam-benzene spread reached such low levels was on January 6, 2010, when the spread was at $1,138.50/mt.
The Asian benzene marker edged up $3/mt, or 0.3%, day on day to $1,023/mt FOB Korea Thursday due to an uptick in demand for August. During the Platts Market on Close assessment process Thursday, GS Caltex registered a bid for August at $1,005/mt FOB Korea and gradually raised it to $1,020/mt FOB Korea, but it was not taken out. As such, H1 August was assessed at $1,022/mt FOB Korea.
Asian caprolactam was assessed at $2,260/mt Thursday, down $10/mt week on week on a CFR Far East Asia basis. Market sources attributed the price decline to dismal downstream nylon demand amid high inventory levels.
Caprolactam producers typically need caprolactam to be $1,300/mt higher than feedstock benzene to break even which, at the current benzene price, would be $2,323/mt. With CFR Far East Asia caprolactam assessed at $2,260/mt Thursday, Asian caprolactam producers would be making losses of around $63/mt.
Nylon chip production typically accounts for 80% of caprolactam usage, and producers typically require nylon chips to be priced $300/mt higher than caprolactam to break even.
"I heard that nylon chips are being sold at close to similar levels as caprolactam prices in China," a trader said, implying that nylon chip producers are facing losses too.
Taiwanese nylon chip producer Li Peng has decided not to announce its June nylon chip contract nomination price, a company source said Wednesday. "We will negotiate prices on a case-by-case basis with our clients instead," the company source said.