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Report | December 2016

Polyamide: Massive shifts in supply-demand pattern

Textile filament has been one of the fastest growing segments for PA6, increasing from 32 per cent of global demand in 2010 to 36 per cent in 2016. But by 2030, textile filament is expected to be only 34 per cent of total PA6 demand.

“For the last decade China has been the epicenter of the global PA6/PA66 industry. Its growth has underpinned much of the increase in global polyamide demand and its needs have been a significant factor in setting prices for polyamide-based materials throughout the world,” says Quentin de Carvalho, Head of Nylon at PCI Wood Mackenzie.

Carvalho continues, “In 2010, China accounted for 37 per cent of global PA6 demand and 16 per cent of global PA66 demand. In 2016 it is expected to be 47 per cent of PA6 and 22 per cent of PA66, according to PCI Wood Mackenzie estimates. Much of this growth has been met by imports of PA raw materials (caprolactam, adiponitrile, hexamethylene diamine and adipic acid), or PA polymers. These growing international trade volumes led the polyamide industry to become increasingly global in nature, as China’s gravity pulled all other aspects of the industry together.This pattern is now changing. In 2010 China began an immense investment programme in polyamide, with the intention of becoming self-sufficient in all aspects of the industry. Six years on, China has now achieved this status – at least on paper - but yet the investments continue. This is having profound implications for both China and the rest of the global industry.”

On the publication of the 2016 Yellowbook (Global PA6/PA66 Supply Demand Outlook), Carvalho and his colleague Janek Müller have set out their predictions for market growth (by segment), capacity development and trade over the period 2016-2030.

Carvalho adds, “As China has become increasingly self-sufficient in polyamide, it is requiring less material from elsewhere, and this is causing a major re-balancing of global supply chains. For example, in 2012, China imported 518 ktes of PA6 polymer and 707 ktes of caprolactam. This year we expect these imports to be 330 ktes and 210 ktes, respectively. The excess capacities in the other regions which used to be used to supply China’s growing needs are becoming redundant, and this is leading to plant closures and asset rebalancing projects. Already this year Fibrant has decided to close its caprolactam facility in Augusta, USA and BASF has announced its intention of reducing its caprolactam capacity in Europe by around 20 per cent.”

How will these changes affect industry?

These changing trade patterns and asset configurations are causing massive shifts in the local regional supply/demand balances. For example, following Fibrant’s Augusta decision, they expect that the USA will become a net caprolactam importer by 2018. This is a big change. As recently as 2012 the USA was a net exporter of almost 200 ktes per year of caprolactam. Similar changes are already happening in North East Asia and Europe is likely to be next. This means that power is shifting in traditional business relationships, and all parties should understand these shifts.

In adipic acid, exports from the USA have fallen by almost 50 per cent in three years, and they expect Europe to move from structurally long to structurally short in 2016. In fact, the only region with a significant excess of adipic acid in future is predicted to be China. How will this affect supply chains throughout the world? Are the Chinese producers ready to export? Are the buyers in other regions ready to import?

Will the global PA industry be able to grow itself out of these challenges? If so, in which segments? Textile filament has been one of the fastest growing segments for PA6, increasing from 32 per cent of global demand in 2010 to 36 per cent in 2016. Almost all of this has come from China and, as China’s economy matures, and growth levels slow, they expect this pattern to reverse. By 2030 they expect textile filament to be only 34 per cent of total PA6 demand. Instead, they see the non-fibre sectors (engineering plastics and film/flexible packaging) as the main growth drivers over the next decade. This pattern will also be evident in PA66, where engineering plastics will increase from 47 per cent of total global demand in 2010, to 52 per cent in 2016 and 57 per cent in 2030.

Another major market for polyamide is industrial filament (14 per cent of global PA& demand and 25 per cent of global PA66 demand in 2016). A lot of PA-based industrial filament demand comes from the tyre and airbag industries, so ultimately is related to transportation. The major consumer of PA-based engineering plastics is also the automotive industry, so the polyamide industry’s exposure to the transportation sector is very large, and growing. Is this positive or negative and how is it expected to develop in future?

PCI Wood Mackenzie’s Yellowbook provides detailed supply/demand balances for both PA6 and PA66 in 64 different countries, covering the period 1990-2030. It also contains asset-by-asset capacity tables for all the plants in the world which are involved in any aspect of the polyamide industry. All of these data are provided in Excel, in both flat and pivot formats, which allow subscribers to search and manipulate the data easily. In the 26 years since its initial publication, the Yellowbook has become the industry reference work. It is used extensively as a key element in the strategic and business planning activities of all the leading polyamide producers in the world.

Wood Mackenzie, a Verisk Analytics business, is a trusted source of commercial intelligence for the world’s natural resources sector. PCI Wood Mackenzie is a trusted source of chemicals, polymers and fibres intelligence. It was formed by the acquisition of The PCI Group by Wood Mackenzie. Their analysis spans the major aromatic and olefin chemicals, key polymers, and fibres, with particular focus on the polyester and nylon value chains. It is integrated with Wood Mackenzie’s upstream, refining and metals and mining analysis.

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