Global Plastics Summit: Pressures intensify on nylon 6 markets

"The market is very long in nylon 6, and producer operating rates have been falling," said Paul Blanchard, director of engineering plastics at IHS, a forecasting firm. He spoke at the first annual Global Plastics Summit jointly held by IHS and the SPI,  the plastics industry trade association.

Nylon 6 prices are running in the area of $1.62 per pound and have been on a downward trend for the past two years.

The market situation for nylon 6 is expected to further weaken, Blanchard said, because "the Chinese are building capacity ahead of global demand". IHS estimates that 2.5 million metric tons of new nylon 6 capacity will be built in China through 2016. New capacity is also coming in Belgium and Taiwan. Total current installed global capacity of nylon  6 is estimated at 6.6 million metric tons.

In North America, the cost structure to produce nylon 6, an aromatic derivative, will be affected as ethane-to-olefin plants come on line in regions rich with shale gas. "The shift to lighter feedstocks greatly reduces benzene production in the United States," Blanchard said.

One other interesting aspect of nylon 6 is its significant supply base--140 producers in the IHS view. Most plastics markets are highly concentrated. The largest nylon 6 producer, BASF, has only an 8% global market share. 

In another development, other lower-priced plastics are expected to eat into applications held by nylon 6. "In many applications, there has been over-specification for safety reasons," Blanchard said. As an example, he pointed to automotive intake manifolds, which began in metal, then broadly shifted to nylon 6/6, and then nylon 6. Now reinforced polypropylene is emerging as a significant player.

Responding to a question, Blanchard forecast that as much as 10% of nylon production will convert to bio-based feedstocks in the next decade.