Average North American selling prices for nylon and polycarbonate resins came storming back in the second half of 2009, and are trying to head higher still in early 2010.
Pricing pressure hit both materials late in 2009 as the price of oil and of feedstocks such as benzene continued to rise. As a result, prices for nylon 6 resin climbed an average of 20 cents per pound (about 14 percent), nylon 6/6 was up 15 cents (10 percent) and polycarbonate up 15 cents (10 percent or more), according to buyers contacted recently by Plastics News.
The increases came after prices had tumbled along with the global economy in late 2008 and into early 2009. During that time, prices for nylon 6 and 6/6 each had slipped about 15 percent, while PC prices slumped about 14 percent.
The nylon move occurred in an environment where North American resin demand tanked by about 20 percent for full-year 2009, sources said. Most of that move was tied in to the collapse of the North American auto sector, the single-largest consumer of nylon resin.
Demand would have been worse if not for a solid performance from the nylon film market, according to Paul Blanchard, a market analyst with Chemical Market Associates Inc. in Houston.
“Nylon film was stable, which made it the only bright spot, since auto production was off more than 30 percent,” Blanchard said. “Automotive demand [for nylon] will come back this year, but it won't be hockey stick-like improvement.”
A 20 percent drop in demand sent the region's nylon resin sales under the billion-pound mark for the first time in recent memory. Annual sales had bounced between 1.2 billion and 1.4 billion pounds from 2004 through 2007 before falling near 1.1 billion pounds in 2008, according to the American Chemistry Council in Arlington, Va.
But demand took a back seat to feedstocks in late 2009, as prices for benzene, phenol, caprolactam and cyclohexane rose. Suppliers of nylon 6 and 6/6 now are seeking additional increases of 12-14 cents per pound for Feb. 1.
Longer-term, the region's nylon market will be affected by the battle between new entrant Invista and large existing suppliers such as DuPont Co.
At NPE2009 in Chicago, Invista officials said the firm planned to start producing nylon resin at several sites, including Chattano- oga, Tenn., and Kingston, Ontario.
Invista and DuPont also are waging a legal battle, after DuPont claimed Invista violated terms of a non-compete agreement connected to its 2004 sale of its fibers business to Koch Industries Inc., which later formed Invista.
In PC, benzene feedstock played a heavy role, surging from around $1 per gallon in early 2009 to almost $4 by year's end. This sent makers of PC resin up against a wall, and they responded with successful price hikes.
“Margins had gotten to the point where they were just no longer acceptable,” said Greg Smith, a market analyst with Resin Technology Inc. in Fort Worth, Texas.
As in nylon, average PC selling prices fought their way upward as demand fell. Smith estimated that regional PC resin demand fell by as much as 15 percent in 2009, as a result of lower demand in the automotive and optical media (CD, DVD) markets. Concerns about the alleged health risks of PC feedstock bisphenol A also had a negative impact on 2009 PC demand, he added.
Industry sources added that regional PC availability was tightened somewhat in 2009 by a temporary shutdown at a Sabic Innovative Plastics US LLC plant in Burkville, Ala., and by lower production from the firm's plant in Mount Vernon, Ind. Production at both sites was closer to normal as 2010 began, sources said.
PC makers now are working to implement increases of 9-15 cents per pound for January.
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