CONTRACT DELTA Q3: €148/tonne (+3)
Supply and demand
The European cyclohexane (CX) market remains balanced this week, although the ongoing production issues seen for caprolactam (see below) meant that offtake from that sector is lower than expected.
Activity was muted due to many players absenting themselves as the holiday period approaches. Other sources were said to be waiting for the August benzene settlement, which settled late on Friday (see below), and the impact this will have on the CX market.
Upstream
The European August benzene contract has been agreed at €886tonne FOB NWE, up by €132/tonne from the previous month. The settlement was made at a US dollar concept of $1,263/tonne and converted to the euro price at the officially agreed exchange rate of €1 to $1.4255.
A sizeable increase is expected following gains of nearly $200/tonne on spot prices during July. Several production problems and healthy downstream demand are keeping the market balanced-to-tight, while firm prices in Asia and the US added to the current bullishness. Spot values were at $1,280-1,295/tonne CIF ARA on Friday, up $35-42/tonne from last week’s close.
Downstream
Players in the caprolactam market this week confirmed that the market remains very tight. This is primarily due to supply issues. Producers emphasised that short supply in Europe is likely to be exacerbated by rising demand from, and increasingly attractive prices in, Asia.
European demand is said to be relatively quiet in the textiles market, although engineering plastics continue to be quite strong, except for southern Europe. The slowdown in textiles is mainly due to the summer holidays lull but one buyer said its buyers, downstream, were more reluctant than usual to commit themselves to orders for September and October.
Sources on both sides of the market said some business remained to be settled for July. One producer stated it had not settled any of its contracts for this month yet, in the face of what it described as customer stubbornness.
Players in the European adipic acid market this week confirmed that it continues to be long. Buyers say it is the presence of the imports that accounts for the current length of the market.
On the other hand, the supply side detects an impending change in direction. One producer said the last two months have witnessed a slowdown in Chinese purchasing activity, while a destocking phase has been underway in China. It said this process shows signs of having been completed, to be succeeded by a renewed wave of buying. Since the Asian market is now so significant in a global context, this development was bound to have an impact on the balance of the European market, it asserted.
($1=€0.70)
Covering editor: Truong Mellor
This week on ICIS ( www.icis.com ) :
29/07/2011 07:29 Asia benzene hits three-month high on rising prices in US, styrene
28/07/2011 16:07 Europe August benzene contract to firm on global bullishness
27/07/2011 09:05 August capro contract offer at $3,450/tonne CFR NE Asia
27/07/2011 06:30 Thailand’s Ube Chemicals eyes capro debottlenecking on 1 November
