Auto Industry Faces Nylon Supply Crunch, Surging Demand Further Lifts the Price Chart

Nearly all polymer prices have been on a surge since the start of this year and the increases have been significantly affecting the buyer’s pockets. The impact of nylon resin shortages is quite visible in the downstream industries especially the automotive.

Following the global uptrend, US Polyamide is continuously accelerating upwards since January 2021 amidst continued tightness in the market supply. In lieu of several supporting factors driving the price curve, the US Polyamide 6 prices have risen in the range of USD 200-600 per MT with the variation depending on the producer's response to the market cyclicality.

The tightness was led by BASF declaring force majeure at its Nylon 6 and 6,6 facility in February at its Freeport, Texas facility due to Gulf Coast winter freeze. Not only in the US, things also seemed bleak for the company’s Nylon operations in Europe, particularly in Belgium where there was an incident of blaze at the Antwerp plant, causing it to suspend operations from 31^st March until further notice.

Bracing the raw material upsurge, several automotive industry giants have warned buyers of escalation in the offered rates amidst incessant increase in the production cost of certain car parts such as for vehicle airbags, tyres etc., citing the unavailability of enough raw materials due to the U.S. cold snap.

Amidst rising shortness in the market supply, BASF announced fresh round of price increases for the feedstock Caprolactam, Nylon 6 and Nylon 6/66 copolymer in North America which will be effective from May 1. The company announced an increase of around USD 660 per Mt on each of these commodities.

AdvanSix, one of the leading fully integrated manufacturers of Nylon 6 globally, also increased its Nylon 6 prices by USD 198 per MT during April 2021. The company is also expecting a maintenance turnaround in Q2 of 2021. Other manufacturers followed the similar suit, finding no other option but to transfer the price increases to their end-customers.

Nylon 6 and 66 resins are widely used in engineered plastics for the automotive industry, films for food and industrial packaging, as well as other higher performance applications. The overall market growth traces the global GDP growth over the long-term and end-use consumption.

As per the ChemAnalyst pricing intelligence, Polyamide prices are likely to remain resilient in the April-May period with demand outpacing the supply. After the production got severely hampered due to mid-February winter storm, producers in Texas and Alabama are gearing up to return to normal levels in upcoming months.