Nylon 66
Market Update
Mark Kallman
Director of Client Support, Engineering Resin /PVC/PS
ResinSmart Market Drivers
What is Driving Pricing Moves Up or Down
Real Time Costs
Feedstock Cost
Intermediates Cost
Resin Cost
Supply/Operational/Capacity Issues
Outages
Capacity Growth
Demand/Global Growth Issues
Import Export
Economic Growth
Currency
Always one of these 3
In Nylon 66 the Cost Drivers are…
Feedstocks & Intermediates
Oil/Naphtha/Gas Oil
Natural Gas
Benzene/Cyclohexane/Adpic Acid
Propylene/Ammonia/ Acrylonitrile/HMD
Butadiene/HMD
Toluene
Oil & Natural Gas
HDA TDP
Naphtha
Ethane / Propane / Gas Oil / Naphtha
Reformer
The Big 3
Building =
Blocks
Benzene
Butadiene
Crackers
Ethylene
Propylene
Ammonia
Cyclohexane
Adipic Acid
Butadiene
Acrylonitrile
HMD
HMD
Nylon 66
In Nylon 66 you need to watch …
Feedstocks & Intermediates
Price
Contract
Spot
Oil/Naphtha/Gas Oil
Natural Gas
Benzene/Cyclohexane/
Adpic Acid
Propylene/Ammonia/
Acrylonitrile/HMD
Butadiene/HMD
Margin
Supply
Capacity Utilization
Inventories
Demand
Supply/Operations/Capacity
Big 3: Benzene
2008 Benzene driven by
capacity restrictions due to high oil prices, no margins
technical outages
lighter feeds producing less benzene. No margin for
producers with high priced oil so capacity was reduced
as demand remained
2009 Margins started to come back
as oil collapsed
then benzene price and demand collapsed reducing
capacity once again
Pricing is starting to rebalance with oil as supply moves
toward demand due to greater value in gasoline
Supply/Operations/Capacity
Big 3: Propylene
2008 Driven by high oil pricing and ethane as the lower cost
feed producing less propylene from the crackers and strong
demand for export
2009 Demand has collapsed, liquid feeds came into favor in
Q4, an oversupply situation developed and the market came
down $.65/lb. to the point where propylene was more
valuable as fuel
Supply is rebalancing. Pricing is increasing as fuel value has
increased and supply has been constrained
Supply/Operations/Capacity
Big 3: Butadiene
2008 Operational issues (some due to Ike), lack of margin to
produce feedstock due to high oil raised pricing to a new
record
2009 Operational issues resolved, demand has collapsed due
to automotive need for rubber falling and pricing has been
reduced from $1.22 to $.28/lb in February
Nylon Supply
and
Demand
NA PA66 Supply
Base Polymer Producers
Dupont, BASF, Solutia, Rhodia, Radicci, Nylit, Lanxess, DSM,
Asahi, and a number of others
Not all participate on a broad basis
Compounders
Ashley, Clariant, Entec, Michael Day, Polyone, Wellman,
Schulman, Sabic, RTP, Custom Resins and many others
Although the numbers of producers active in NA is somewhat
limited there are larger numbers of compounders to
generate healthy competition
PA 66 Demand/Global Growth
Import/Export, Economic Growth, Currency
2008
Strong export year for all resins
Due to weak US$ even as
US economy/demand was weakening, global economy
remained stronger
2009
US$ has strengthened
and the global economy has weakened
with credit issues further restricting exports.
Export levels are low
NA PA 66 Demand
Automotive, electronics, construction and textile in NA demand has
been off dramatically in 2008 continuing into 2009
NA producers made more resin in 2007 than in 2006 despite
significant weakness in NA demand, followed by a decline
in 2008
Exports grew 5% in 2008 after growing 16% in 2007. 2009 is
expected to decline significantly
Weakness in demand will continue in 2009 with recessionary forces
here and abroad adding volume and competition to the NA
market even as capacity utilization is reduced
Today price decreases are primarily cost driven in the middle of
highly volatile price decreases in raw materials. Over
corrections in raw materials will reset, still leaving costs far
below previous levels
Nylon
Market Update
Nylon Market Update
Feedstocks
Benzene Jan. contract is $1.35/gal, up $.34/gal ending a record
breaking drop of $3.45/gal since September
Spot pricing has moved in a narrow band of $1.35-1.40/gal
Propylene is likely up $.08-.10/lb across Jan & Feb
Butadiene is down by 75% from it’s peak to $.28/lb in Jan
Ammonia is also down by 75% from their peak values during the
height of the commodities run up, expected to stay close to
the lower levels in the coming year
Production rates for feedstocks; Benzene, Propylene, Butadiene,
Cyclohexane, and Caprolactam have been reduced due to poor
demand and margin
Nylon PA 66 Market Update
Cost to produce by the butadiene route is expected up by more
than $.03 in February, but more than $.20 lower than a
year ago
Cost to produce by the acrylonitrile route is expected up more
than $.05 in February, but is still more than $.30 lower
than a year ago
Producers have agreed to price reductions of $.05-.25/lb
depending on grade, volume and degree of competition
Lack of demand (actual PO’s), expensive producer
inventories and desire to maximize margins on lower volume
have slowed further progress
Invista is moving ahead with plans for the closure of 1/5 of their
global capacity in PA66 in Wilton, UK, representing a little
more than 5% of global PA66 capacity
Nylon Market Outlook
30 Day Outlook
Higher benzene and propylene contract settlements in February
have pulled costs off the bottom, but margin growth in PA66
will continue to erode throughout the quarter
PA66 prices have yet to catch up to lower raw material costs
PA6 has slipped modestly lower with little room for further
decline
Buy as needed for PA66
60-90 Day Outlook
PA price reductions will slow as feedstocks trend upward.
Significant demand improvement appears unlikely, keeping
downward pressure on PA66
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