The calm before the storm for the nylon industry?

Following a period of turmoil, the nylon industry has enjoyed particularly favourable conditions over the past couple of years. All of that is about to change, however, as 2019 is expected to be a year of more volatility. Below are the key issues to focus on for 2019 in the polyamide and nylon industries. 

1. Crude oil and raw material instability

During 2018, global geopolitical instability pushed up the price of oil by almost 50% and this decreased towards the end of the year. However, the main polyamide feedstocks were more or less spared. Benzene, butadiene, propylene and ammonia didn't increase at the same rate. The drivers that allowed this protection will not necessarily have the same positive effects on the cost of polyamide in 2019 and therefore understanding these drivers will be fundamental to the success of businesses over the next 12 months.

2. ADN shortage and the impact on the HMD and PA66

In terms of ADN (Adiponitrile) availability, 2019 may be an even tougher year than 2018. A shortage of ADN has been aggravated by several major technical and environmental forces, which calls into question the future of PA 66 in 2019. The Butachimie closure, which began in September, is expected to have a significant impact on the overall balance of PA 66. Understanding how the supply and demand for ADN will develop in 2019 and beyond is essential for those who both directly and indirectly depend on this essential material.

3. Caprolactam and PA6 product availability and market prices

The caprolactam (used to make PA 6 EP, filament and fiber) market is becoming increasingly regional, which has a significant impact on prices and margins. This market is also heavily dependent on the cost of production directly related to the price of benzene. As a result, a combination of understanding and forecasting the cost of raw materials, including benzene, and the supply/demand balance of caprolactam and PA 6 will remain a priority for 2019.

4. Environmental concerns and legislation

Environmental concerns as hurricanes or the level of Rhine river and legislation updates have been crucial for the polyamide industry. The intensity of winter in China and the policy update to include a temporary closure of production units have both had an immediate impact on the availability and prices of cyclohexanone, adipic and caprolactam. How the weather will impact the market and the degree to which authorities develop or impose the current legislation is something the polyamide industry will be keeping a close eye on in 2019.

5. The risk of substitution

The significant increase in polymer prices, in particular PA66 in 2018, has dramatically changed the criteria for choosing materials for industrial, textile fibres applications and engineering plastics. The grey zone between PA 6 and PA 66 are expected to become more complex as other materials, such as PBT, become realistic alternatives. 2019 could well be the year in which the decision to replace these materials is made, therefore monitoring the substitution outlook, including PBT, will be critical.

Quentin and his team of nylon experts will be exploring these themes in more detail at the upcoming 2019 Wood Mackenzie Nylon Conference Series, taking place in Frankfurt, Atlanta and Singapore.