Nylon is Resilient – What about the Nylon Industry?
Transcript of Nylon is Resilient – What about the Nylon Industry?
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6th China International Polyamide & Intermediates Forum
Nylon is Resilient –What about the Nylon Industry?
6th China International Polyamide & Intermediates F orum3-5 Dec 2008, Rainbow Hotel, Shanghai, China
Speaker : Charles FryerCompany : Tecnon OrbiChem
230
240
250
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290
300
310
320
330
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Thousand Ton
Monthly
6 MonthMean
Source: Tecnon OrbiChem
Figure 1
Optimistic view1.3% Growth pa
Pessimistic view0% Growth pa
POLYAMIDE FILAMENT WORLD MONTHLY PRODUCTION
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6th China International Polyamide & Intermediates Forum
0
200
400
600
800
1,000
Europe incCIS & Turkey
USA China South Korea Taiwan Japan
Ktpa
2003
2004
2005
2006
Figure 2
1999
2000
2001
2002
2007
2008 est.
Source: Tecnon OrbiChem
GLOBAL PRODUCTION OF NYLON FILAMENT OVER LAST 10 YE ARS
2,500
3,000
3,500
4,000
4,500
5,000
5,500
1984 1988 1992 1996 2000 2004 2008 2012 2016
Thousand Tons
Figure 3
No new plants2010-2016
Consumption
Growth 3.4% pa
Growth 3.0% pa
Growth 2.7% pa
Growth2.3% pa
Capability
Source: Tecnon OrbiChem
WORLD CAPROLACTAM CAPABILITY versus DEMAND
1984-2016
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6th China International Polyamide & Intermediates Forum
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Dollars Per Ton
CyclohexanePrice
BenzeneContract
AmmoniaPrice
Naphtha Price
Figure 4
Source: Tecnon OrbiChem
EUROPEAN CYCLOHEXANE, BENZENE, AMMONIA and NAPHTHA PRICES
0
400
800
1,200
1,600
2,000
2,400
2,800
3,200
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Dollars Per Ton
Polyamide Fibre PA6 75 den Taiwan
Asian Caprolactam Import Contract
WE 1.03 Cyclohexane + 0.30 Ammonia
WE Naphtha Price
Figure 5
Source: Tecnon OrbiChem
CHAIN FROM NAPHTHA TO POLYAMIDE
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6th China International Polyamide & Intermediates Forum
0
500
1,000
1,500
2,000
2,500
3,000
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Dollars Per Ton
Margin
WE 1.03 Cyclohexane + 0.30 Ammonia
Asian Caprolactam Import Contract
Figure 6
WE HeavyFuel Oil Spot
Source: Tecnon OrbiChem
ASIAN CAPROLACTAM MARGIN over WEST EUROPEAN 1.03 CYCLOHEXANE + 0.3 AMMONIA
0
500
1,000
1,500
2,000
2,500
3,000
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Dollars Per Ton
WE 1.03 Cyclohexane + 0.30 Ammonia
Asian Caprolactam Import Contract
Figure 7
WE HeavyFuel Oil Spot
Margin
Source: Tecnon OrbiChem
ASIAN CAPROLACTAM MARGIN over WEST EUROPEAN 1.03 CYCLOHEXANE + 0.3 AMMONIA
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6th China International Polyamide & Intermediates Forum
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Dollars Per Ton
Margin
Asian Caprolactam Import Contract CFR
Taiwanese Nylon 6 Filament 70 den DEL
Figure 8
Source: Tecnon OrbiChem
TAIWANESE POLYAMIDE 6 FILAMENT MARGINover 1.03 ASIAN CAPROLACTAM IMPORT CONTRACT
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Dollars Per Ton
Price Gap
Taiwanese Polyester Filament150 den DTY Price DEL
Taiwanese Nylon 6 Filament 70 den DEL
Figure 9TAIWANESE POLYAMIDE 6 FILAMENT PRICE PREMIUM ABOVE POLYESTER FILAMENT
Source: Tecnon OrbiChem
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6th China International Polyamide & Intermediates Forum
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2,200
2,400
2,600
2,800
1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
Dollars Per Ton
Differential
Polyester Raw Material Cost = 0.865 xPTA + 0.35 x MEG
Caprolactam Import Contract
Figure 10EAST ASIAN DIFFERENTIAL BETWEEN POLYAMIDE 6 AND POLYESTER RAW MATERIAL COSTS
Forecast
Source: Tecnon OrbiChem
Figure 11CAPROLACTAM PRODUCTION vs CONSUMPTION DISTRIBUTION 2007
Source: Tecnon OrbiChem
W est Europe23.1%
East Europe4.1%
N America17.1%
Taiwan11.4%
China7.6%
China11.6%
Rest of W orld19.0%
Japan6.0%
W est Europe6.0%
W est Europe23.4%
East Europe4.0%
East Europe6.9%
N America16.9%
N America4.4%
Japan5.8%
Japan5.8%
Rest of W orld18.8%
China8.0%
SURPLUS
SURPLUS
Needing imported
caprolactam
Needing imported
caprolactamCAPROLACTAM
CAPACITY
Total: 4,500 kt Total: 4,100 kt
CAPROLACTAMCONSUMPTION
SURPLUS
SURPLUS
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Figure 12WORLD CAPROLACTAM REGIONAL NET TRADE 2004-2007
-500
-400
-300
-200
-100
0
100
200
300
400
Thousand Tons
S &
SE
Asia
E E
urope
W E
urope
N A
merica
S A
merica
ME
& A
frica
E A
sia/Japan
China
2005
2004
2006
2007
Source: Tecnon OrbiChem
Figure 13NYLON INTERMEDIATES PRODUCERS 2007Share of Production Capacity
Source: Tecnon OrbiChem
BASF16.7%
DSM12.0% Honeywell
7.6%
CPDC6.1%
Ube Ind8.8%
CIS10.9%
Others14.8%
Toray Ind2.1%
Capro Corp5.3%
Sinopec China4.7%
Caproleuna3.1%
Lanxess3.8%
Sumitomo Chem4.1%
Invista30.0%
Solutia16.3%
Rhodia13.2%
BASF5.1%
Asahi Kasei4.3%
DuPont12.7%
Sabanci7.0%
China Shenma5.7%
Radici2.9%Others
2.8%
AH Salt (PA66)3,500 kt
Caprolactam (PA6)4,500 kt
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0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
2001 2002 2003 2004 2005 2006 2007 2008
Asian Polyamide PA66 Tyrecord Filament Price
China AH Salt Import Price
Asian Adipic Acid
WE Naphtha Price
Asian Benzene
Dollars Per Ton
Figure 14THE PA66 SUPPLY VALUE CHAIN
They were!Things seemed too good to be true
Source: Tecnon OrbiChem
Invi
sta
Rh
od
ia
So
lutia
BA
SF
Ra
dic
i
Lia
oy
an
g
Asa
hi K
ase
i
Lan
xe
ss
Ch
ina
Sh
en
ma
Uk
rain
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Ch
ina
Ne
w
0
200
400
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800
1,000
1,200
Figure 15ADIPIC ACID CAPACITY 2007: ADDITIONS 2008-2010
Ktpa
Bohui
Hongye
Dushanzi
2008-2010
2007
Source: Tecnon OrbiChem
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Figure 16WORLD ADIPIC ACID SUPPLY/DEMAND BALANCE 2000-2015Thousand Tons
0
500
1,000
1,500
2,000
2,500
3,000
3,500
2000 2002 2004 2006 2008 2010 2012 2014
Consumption
Capacity
Source: Tecnon OrbiChem
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-250
-200
-150
-100
-50
0
50
100
150
200
Thousand Tons
Figure 17WORLD ADIPIC ACID REGIONAL NET TRADE 2004-2010est
S &
SE
Asia
E E
urope
W E
urope
N A
merica
S A
merica
ME
& A
frica
E A
sia/Japan
China
2005
2004
2006
2008est
2009est
2010est
2007
Source: Tecnon OrbiChem
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Figure 18WORLD ADIPIC ACID CONSUMPTIONBY END-USE 2000-2015Thousand Tons
0
500
1,000
1,500
2,000
2,500
3,000
3,500
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
AH Salt
Plasticisers
Urethanes
Growth 2.3%
Growth 6.0%
Other
Growth 4.2%
Growth 3.0%
Source: Tecnon OrbiChem
Dollars Per Ton
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
2001 2002 2003 2004 2005 2006 2007 2008
Margin(Tyrecord –1.17 x AH Salt)
China AH Salt Import cfr
Asian Nylon 66 Tyrecord 1260 den Filament
Figure 19MARGIN FOR PA66 1260 DEN FILAMENT PRODUCTION IN ASI A
Source: Tecnon OrbiChem
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6th China International Polyamide & Intermediates Forum
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2,200
2,400
2,600
2,800
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
0
2
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Dollars Per Ton
Butadiene
Ammonia
Natural Gas(mmBtu)
Figure 20US BUTADIENE, AMMONIA and NATURAL GAS PRICES
Dollars Per mmBtu
Source: Tecnon OrbiChem
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Dollars Per Ton
Butadiene
Ammonia
Heavy Fuel Oil
Figure 21EUROPEAN BUTADIENE, AMMONIA and HEAVY FUEL OIL PRICES
Source: Tecnon OrbiChem
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0
500
1,000
1,500
2,000
2,500
3,000
3,500
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Dollars Per Ton
HMDA JapanImport cfr
Ammonia
Methane (Natural Gas)
Figure 22US BUTADIENE, AMMONIA and NATURAL GAS PRICES vsJAPAN IMPORT HMDA cfr PRICE
Butadiene
Feedstock Costs per Ton HMDA
Source: Tecnon OrbiChem
0
500
1,000
1,500
2,000
2,500
3,000
3,500
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Dollars Per Ton
HMDA est. Export Price fob
Feedstock Costs per Ton HMDA
Fixed costs plus Cash
Margin
Figure 23US BUTADIENE, AMMONIA and NATURAL GAS PRICES vs JAPAN IMPORT HMDA cfr PRICE
HMDA JapanImport cfr
Source: Tecnon OrbiChem
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Figure 24LONG TERM AVERAGE PRICES OF FIBRES & INTERMEDIATES - Crude Oil ~$50/bbl
Source: Tecnon OrbiChem
500
700
900
1,100
1,300
1,500
1,700
1,900
2,100
2,300
2,500
2,700
Dollars Per Ton
Caprolactam
800 average
PA6 Polymer
250 300
400
PA6 Filament(FDY 70den)
200
100
500
0.865 PTA + 0.35 MEGMEGPTA
100
300PEs Staple
700
750
1100
PEs FDY 70 den
Benzene
PA66 Staple
Crude oil ~ $50/bbl
1100
PA6 Staple
0.66 AA + 0.52 HMDA
1.17 AH salt
PA66 Polymer
PA66 Filament(FDY 70den)
Figure 25LONG TERM AVERAGE PRICES OF FIBRES & INTERMEDIATES - Crude Oil ~$75/bbl
Source: Tecnon OrbiChem
500
700
900
1,100
1,300
1,500
1,700
1,900
2,100
2,300
2,500
2,700
2,900
3,100
3,300
Crude oil ~ $75/bbl
Caprolactam
1000 average
PA6 Polymer
250 300
550
PA6 FilamentFDY 70den)
200
PA66 Staple
800
100
300PEs Staple
700
1200
1550
PEs FDY 70 den
100
Dollars Per Ton
0.865 PTA + 0.35 MEG
MEGPTABenzene
1300
PA6 Staple
PA66 Filament(FDY 70den)
0.66 AA + 0.52 HMDA
PA66 Polymer
1.17 AH salt
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0
500
1,000
1,500
2,000
2,500
3,000
3,500
0 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150
Dollars Per Ton
China AH Salt Import Price x 1.17
Asia 0.865 PTA+ 0.35 MEG
Figure 26PA6, PA66 and PES RAW MATERIAL COST vsBRENT CRUDE OIL 2000-2008
Asia CaprolactamImport Contract Price
Brent Crude Oil $/bbl
Source: Tecnon OrbiChem
CONCLUSIONS
• Growth: nylon fibre has been growing at 1.3% per year worldwide, but in recent years this has fallen to zero and negative growth is likely in 2008 and 2009
• Polyamide engineering resin is growing at around 4% per year, through its penetration into new areas, such as automobile components, but growth will slow or go negative in 2009 with recession in some automobile industries
• Long term polyamide growth overall (PA6 + PA66) is thus likely to be around 2.2%/year, but only after three years’ loss of growth 2007-2010
• Poor growth prospects will discourage investment in new caprolactam plants
• The present pattern of caprolactam trade will thus continue
• Caprolactam producers are having to pass on to customers all the recent reduction in their benzene, ammonia and energy costs
• PA66 producers still have high costs, with butadiene prices still high
• Caprolactam and PA6 will be hard pressed by competition from polyester
• PA66 is suffering the greatest feedstock pressures, but so far is managing to retain its premium quality image and pricing
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