Home LatestPA66 NYLON 6/NYLON 66: FALLING MARGINS

NYLON 6/NYLON 66: FALLING MARGINS

September 20, 2019

LONDON (GC Intelligence) — Nylon 6 (PA6) and Nylon 66 (PA66) engineering resins experienced another month of margin contractions. The increase in activity after the summer holidays failed to live up to expectations.

September was another month of subdued demand, increase in availability and falling prices.

With key raw materials such as benzene preventing cots from falling, profits have decreased for producers.

But PA66 margins are still healthy as prices remain well above €3000/mt according to GC Intelligence data.

PA66 prices during the past few months have fallen by as much as €550/mt, but the starting point was the peak reached recently when there were severe supply shortages.

The seasonal slowdown in demand and costs during the winter months should provide further downside and most likely there will be more margin erosions.

The picture on PA6 was a little different. PA6 has been structurally oversupplied because of a global overcapacity. As a result margins have been rather low for quite some time.

A persistent slowdown in demand in 2019 has caused supply to increase even further. As a result, prices have been falling regardless of the movements in costs, resulting in very thin margins for producers.

Overall, the poor start in activity in September also suggests that PA6 and PA66 buyers remain cautious and are likely keeping orders to a minimum.

Recent events in the Middle East injected further uncertainty that was already high because of worries such as economic slowdowns, tariff disputes and Brexit.

With little to no signs of a turnaround, demand should remain weak at least until the end of the year, placing more pressure on prices and margins.

NOTE: For price levels, forecasts, and a more in-depth analysis take a look at the GC INTELLIGENCE® Market Reports…

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