Oil and benzene prices supporting nylon chain, nylon yarn trends up

Benzene prices have gained 14-16 per cent across regions in March, pushed by an uptick in demand and stronger crude as players in US wanting to open the arbitrage window from Europe amid tighter supply expectations. However, benzene prices were seen easing end March as upstream toluene cooled down while arbitrage window to US remained closed. The week also witnessed a rare reverse arbitrage move. An estimated 20,000 ton cargo was set to arrive in China from the US in March-end. In US, spot benzene moved higher ahead of April contract price while Latin benzene prices tracked regional gains amid thin shipping activity. In Europe benzene jumped amid April contract price negotiations.

Crude oil markets opened the month on the high with US Futures closing the first week at US$50.40 per barrel. It fell to US$47.67 in second week and further to US$44.34 in the third. Prices jumped 5 per cent in the last week on fears that a conflict in Yemen could disrupt cargoes on the neighboring Bab el-Mandeb Strait, where 3.8 million bpd of crude and oil products flow. Houthi rebels made broad gains in south and east Yemen despite a two-day strike led by Saudi to check the Iranian-backed militia’s efforts to overthrow President Abd-Rabbu Mansour Hadi. The sluggish price trend added uncertainty to the benzene markets.

For March, Asian benzene marker, the FOB Korea gained 14 per cent to average US$667-668 a ton while North West European benzene barges for delivery 5-30 days forward averaged US$706-707 a ton CIF ARA, up 16 per cent. In US, spot prices were up 15 per cent to average US cents 246.20-246.30 per pound.

Caprolactum prices firmed up on the back of tight supply, passable demand and range-bound benzene prices. Asian markers, the SE and FE were up 6-7 per cent in March averaging US$1,632-1,677 a ton. In China, offers for liquid goods were at US$2,245-2,280 a ton and solid goods at US$2,310-2,410 a ton. Sinopec settlement for March was up US$35 from offers at US$2,230 a ton, for liquid, AA-grade. In Europe, a majority of caprolactum contracts were settled at an average increase of Euro 15, compared with an underlying benzene increase of Euro19. Deals which were concluded at the beginning of the month were marginally lower. In US, caprolactum price inched up US$20-30, to US$1,420-1,430 a ton.

Run rates in nylon chip market stabilized and polymerization units were running at around 80 per cent with inventory at around 2 days’ worth. Nylon chip prices inched up as raw material cost held firm on support of firm benzene cost. In non-textile-yarn, cord fabric, fishing net yarn and staple fiber sectors, buying interest for chips was mild, with prices underpinned. Offers for Taiwan-origin nylon chips from major producers were at US$1,968-1,995 a ton for March, up 6-7 per cent from previous month. High end monofilament/engineering plastics grade chips were at US$2,360-2,475 a ton.

In China, the market for nylon textile filament was not yet fully emerged from the holiday, but the general view was that nothing much has changed. Nylon yarn makers were running at 69 per cent capacity, with inventory at around 29 days’ worth, and industrial yarn producers were running at 65 per cent capacity. Filament yarn prices turned upward on rising costs while prices of staple fiber and cord fabric rose cautiously. Overall demand was slow to follow up, with most orders made on demand-basis, lending limited support to yarn makers. In China, semi-dull FDY70D/24F prices were at US$3.00-3.03 a kg while FDY40D were at US$3.34-3.50 a kg, both up US cents 2-4 from February. Monofilament 30D was priced at US$3.09-3.34 a kg, up US cents 9 on the month.

Courtesy: YnFx Weekly PriceWatch Report