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Commodity Engineering Resin Production, Consumption Shifts to Asia


18. October 2016

 

Supply/demand in balance for PC, nylon 66; overcapacity looms large for ABS, nylon 6.

 

A mixed bag reflects the market outlook for the four large-volume commodity engineering resins—ABS, PC, nylon 6 and nylon 66. At this year’s Global Plastics Summit (GPS 2016), co-hosted by IHS Markit and SPI: The Plastics Industry Trade Association. Paul Blanchard (pictured) IHS Markit’s senior director for engineering plastics tackled this subject. Here’s a look at key takeaways from his presentation.

 

ABS

• Global ABS demand needs to catch up to capacity additions.

• Lower prices can be had from North American suppliers.

• ABS consumption is mainly in Asia—83%.

• Asian ABS suppliers are selling at near variable breakeven cost.

• Capacity overhang in key Asian market restrains operating rates and profit margins.

• Global prices to remain under downward pressure.

• Supply/demand balance will improve with modest demand growth.

 

PC

• PC rationalization of plants in the U.S., Singapore, Japan and Brazil reset the supply/demand balance in 2016. This, from the overcapacity of 2011-12.

• Tighter supply allows PC suppliers to recover cost increases in the near term.

• North American PC operating rates are pretty high; suppliers gain margin for near term.

• Entry of new Chinese companies is a game-changing development.

 

Nylon 6

• Nylon 6 fiber continues to be “king”, accounting for 66% of consumption.

• China now producing 58% of nylon fiber globally, with most consumption in Asia.

• China’s drive for self-sufficiency is adding capacity well ahead of global demand; this impacts trade patterns.

• Falling exports to Asia are reducing operating rates in North America and Europe.

• Caprolactam plant closures in U.S. and Germany are removing excess capacity.

• Pricing for nylon 6 pricing rising in North America and expected to fall in Asia.

 

Nylon 66

• Global demand for Nylon 66 is balanced and well managed—so far new capacity is tracking demand.

• Operating rates for nylon 66 are in the 80s% range vs. nylon 6 which are at a dismal 60% range.

• Closely-held adiponitrile technology supports high industry concentration; technology barriers to new entrants.

• Performance overlap with nylon 6 in engineering applications.

• Startup of Invista Shanghai plant in 2016 offset by the closure of Invista Chattanooga plant.

• Price trend is upwards.

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