European PA6 and PA66 prices in January still faced downward pressure due persistent low demand despite unrest in the Middle East reducing competition from imports.
Buyers, having capitalized on end-of-year low offers, have no urge to restock amid low demand, intensifying the pressure. However, seasonal trends, less competitive imports and anticipated benzene cost hikes in February should start to support prices; at least prevent further losses. But an overall sluggish market will impede a sustained recovery of prices.
Rising freight rates and
feedstock costs are easing
The market remains oversupplied despite reduced operating rates, as low demand ensures ample availability. Buyers continue to face little difficulties in sourcing volumes—evidenced by some still receiving lower offers, which is more prevalent in PA6 than PA66.
Persistent competitive pressure and weak demand since last year have led producers to cut operating rates, yet oversupply persists. Contributing factors for the oversupply have been a surge in imports last year as seen in Exhibit 3, which was driven by low demand in regions like Asia and non-competitive European prices.
Although the latter part of last year saw a slowdown in imports, likely due to falling demand and prices. And now the rising freight rates is likely to fuel this trend of falling imports.
While some form of restocking and fewer imports could boost domestic demand, ongoing sluggish activity downstream suggests this will unlikely shift market dynamics soon. Cost-wise, the benzene contract settled at €11/MT to €803/MT in January, with caprolactam prices remaining stable.
Source: GC Intelligence
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