Reacting to tight supplies and improving demand, nylon resin prices are up an average of 20 cents per pound since midyear.
``Supplies are starting to return to normal,'' said Dave Donofrio, Americas regional business and marketing director with market leader DuPont Co. in Wilmington, Del. ``But after the hurricanes there was a major hit in some of the petrochemicals that feed nylon intermediates.''
Hurricanes Katrina and Rita knocked out as much as 80 percent of regional capacity for nylon feedstock caprolactam at one point, causing supply tightness at nylon resin plants around the country. The situation has since improved, but Donofrio said DuPont's nylon resin inventories remain at about half the levels the company normally likes them to be.
Inventories also are low at DSM Engineering Plastics, a nylon maker and compounder in Evansville, Ind., according to nylon product manager Bob Akins.
``Our [inventory] levels are down somewhat, but we don't anticipate any issues with supply going into 2006,'' Akins said.
Neither DuPont nor DSM had to place customers on allocation in the ultratight weeks after the hurricane, but industry sources said that nylon makers BASF Corp. and Solutia Inc. had to take that step. DuPont was able to avoid it by bringing in material from nylon plants in other parts of the world, while DSM had enough material on hand to supply its customers until production picked up again.
The increases, including a 15 cent jump in place Nov. 1, are designed to cover higher raw material costs for products such as benzene and natural gas, officials with DuPont and DSM said.
``This isn't a [hurricane] surcharge,'' DuPont's Donofrio said. ``The benzene side took a huge jump in summer 2004 and the natural gas side had a big impact this year.''
Improving demand also is helping the price increases stick. First-half demand was down 8 percent vs. the year-ago period, according to the American Plastics Council in Arlington, Va., but things have picked up in the second half.
The automotive market - which is a user of about 40 percent of the region's nylon resin - has been in the doldrums all year because of higher gasoline prices and lower sales of massive sport utility vehicles and trucks.
DSM's Akins said that field has perked up a little of late, while Donfrio mentioned nonautomotive transportation - in segments like snowmobiles and boats - as an area of improvement.
Akins added that the furniture market is having a solid year after a few down seasons, while lawn and garden products using nylon - such as chain saws and weed whackers - are posting good sales, partly as a result of hurricane cleanup efforts.
Overall U.S./Canadian nylon resin sales for 2005 still are likely to finish below 2004 levels, but the loss won't be nearly as bad as it was at the year's halfway point, sources said.