USES

The two major forms of nylon (polyamide/ PA) virgin polymer are nylon 6, based on caprolactam (capro) and nylon 6,6, based on adiponitrile (ADN), adipic acid and hexamethylene diamine (HMDA). Most nylon 6 production is used for clothing, carpets and engineering plastics for automotive, electrics and electronics. Nylon 6,6 is used predominantly for engineering plastics.

SUPPLY/DEMAND

The nylon 6 market in Europe is structurally oversupplied by hundreds of thousands of tonnes.  New nylon capacity has continued to come onstream in part to alleviate structural oversupply of capro in Europe, which is more acute as fewer volumes are exported into Asia, partly due to China’s substantial capro capacity construction over the last decade.

The most recent nylon 6 expansions in Europe were carried out by Grupa Azoty in Poland and UBE in Spain. Both units came online in late-2017. Combined, the expansions add 120,000 tonnes/year to Europe. 

The nylon 6 market in Q1 2018 has witnessed mostly healthy demand, especially in the engineering plastics and compounding sectors. The exception is nylon-made bulk continuous filament (BCF) carpets thanks to changing fashions and alterative BCF polymers such as polyester.

High quality nylon textiles for fashion and sportswear in Europe, however, has continued to grow. Nylon 6,6 capacity has remained broadly unchanged although a plethora of production issues in the upstream ADN and HMDA markets have meant that nylon 6,6 availability remains extremely tight.

PRICES

Nylon prices have fluctuated quite significantly over the last year with volatility in upstream benzene remaining a significant cause. The macroeconomic situation in Europe has been broadly healthy, and demand in most sectors and grades has remained buoyant, helping to keep prices and margins mostly positive.

Some nylon producers have bemoaned the spread between capro and nylon as too large and described the margins for nylon producers as relatively low. This has become less of an issue for some with more players now integrated capro producers.

Nylon 6 prices in Q1 2018 have remained steady with fundamentals balanced and upstream costs less volatile than expected.

Nylon 6,6, however, has seen further sizeable increases throughout Q1 2018, following multiple issues in the upstream markets which led to a number of players in Europe and around the world declaring force majeure on 6,6 production and ever-tightening market conditions.

With nylon 6,6 prices continuing to rise, some players have questioned how sustainable the spread between the two nylons is, standing at over €1.00/kg (€1000/tonne) currently.  

TECHNOLOGY

Nylon 6 is made from reacting capro with water and a molecular mass regulator, such as ethanoic acid. These elements are poured into a reaction vessel and heated under nitrogen at 227°C. An intermediate, aminocaproic acid, is produced. The process then undergoes condensation to polymerise the molecules.

For nylon 6,6 production, ADN is made from butadiene or acrylonitrile and then converted to HMDA. Then, HMDA is mixed with adipic acid to form a salt. Ethanoic acid is mixed into a solution with the salt and the mixture is heated and the steam bled off. The pressure is reduced, and the polymer is extruded under nitrogen to yield a lace, which is then granulated.

OUTLOOK

Q1 2018 has seen supply remain balanced amid healthy demand and some buyers reporting that additional volumes from the new capacity are yet to be on offer in sizeable amounts. With demand remaining robust in most sectors and availability not lengthening as quickly as some have anticipated, nylon fundamentals are expected to continue to be mostly balanced in the shorter-term with potential lengthening in the long-term.

Overall growth in Europe for 2017 stood above inflation at around 3%. On a global scale, nylon demand grew by an estimated 6% in 2017, with much of that coming from buying appetite in China. 

These growth trends are expected to continue for 2018, with the engineering plastics and compounding sectors anticipated to drive much of the growth market in Europe for the year. Meanwhile, nylon 6,6 demand is also expected to grow at a similar level with some small expansions expected in the US to help meet this growth.

Furthermore, BASF’s purchase of Solvay’s global polyamide business in H2 2017 is  expected to conclude by the summer of 2018. If the deal is concluded as planned, players expect BASF to potentially reorganise its upstream facilities to better ensure  a stable, more efficient supply of nylon 6,6  in Europe.