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Solvay France Adiponitrile Plant Announced Force Majeure PA66 Supply And Demand Tension Is Expected To Intensify
Sep 01, 2018

According  to the latest announcement from PIE (Plastic Information Europe), the  European plastics industry's authoritative website, on February 16,  2018, Solvay announced that its adiponitrile plant at the Chalampé plant  in France suffered force majeure. We believe this event is expected to  further aggravate the supply and demand. A tense global PA66 industry chain. Solvay  France's Chalampé has a capacity of 520,000 tons per year. It is the  world's largest production plant for adiponitrile and the only  production unit in Europe, accounting for one-third of the world's total  capacity, by Solvay and NVIDIA invested 50% each to jointly build.
    The  global oligopoly of adiponitrile This Solvay force majeure will  intensify the tension between supply and demand in the industry: As the  most important raw material in the PA66 industrial chain, the global  production of adiponitrile is mainly concentrated in companies such as  NVIDIA, Solvay, Ao Shengde and Asahi Kasei. , a product that is highly oligopolistic. This  time, the device that declares force majeure is the world's largest and  the only adiponitrile capacity in Europe, affecting one-third of the  global supply. At the same time, all the raw material supplies of all  PA66 producers in Europe are limited, which has a great impact on the  supply side of the industry. Considering  that the previously announced capacity of force majeure is superimposed  on the constraints of European raw material supply, the industry supply  and demand gap is expected to reach 8-10 million tons (calculated  according to the original slice global capacity of 3 million tons).
    The  incident will continue to have a ripple effect on the European PA66  industry chain: With regard to this force majeure announcement, Solvay  still cannot estimate the duration and declares it “a serious incident”,  and announced that all downstream PA66 polymer devices will be Affected  (including French and Spanish polymerization capacity and German  production capacity that have previously announced force majeure); and  because this device is the main raw material supplier of BASF synthetic  PA66 salt, it also makes the resumption of the previously announced  force majeure of BASF equipment far-reaching; The  slicing production capacity of small plants such as Rantic in Europe,  the limited supply of adiponitrile has an unprecedented impact on the  PA66 industrial chain throughout Europe. The chain reaction of the  industry chain will further aggravate the supply and demand tension in  the industry.
    Benefiting  from the overseas economic recovery, the global supply and demand  continued to improve: PA66 demand in the engineering plastics industry  has maintained a relatively high growth rate in recent years. On  the one hand, the European and American economies continued to recover  on the demand side and the economies such as China maintained strong  growth. On the other hand, due to the slow expansion of key  intermediates, the supply side of the products did not increase  significantly in recent years, and the overall supply and demand pattern  of the industry continued to improve. The  global native slice capacity is around 3 million tons, and the annual  demand is between 2.4 million and 2.5 million tons. The global demand  growth rate remains at around 4%.
    Domestic  foreign dependence is high. European supply restrictions will greatly  limit domestic supply: domestic PA66 still relies heavily on imports. In  recent years, domestic production capacity has expanded while the  industry's imports have remained stable. Foreign dependence remains  high; the industry's prosperity has improved significantly. As the rate continues to rise, corporate inventories have reached record lows. As  this force majeure capacity is mainly concentrated in China's main  import destination - Europe, in the context of the continued  fermentation of the European chain PA66 industrial chain chain reaction,  it will further limit the total supply of domestic products to  exacerbate the domestic supply and demand tension.
    It  is recommended to focus on the domestic nylon industry chain leader -  Shenma shares: the company is the only PA66 company with the advantage  of the whole industry chain, its PA66 salt production scale is the first  in Asia and the fourth in the world. At  the same time, the downstream actively expands various high-end  products, including advanced airbag filaments and high-end nylon resins.  The  company has a long-term and stable cooperative relationship with NVIDIA  in North America. The supply and price of adiponitrile are highly  stable, and will not be affected by the supply of raw materials during  the global supply of adiponitrile.
    The  company's most flexible product is PA66 slice, the equity production  capacity is 95,000 tons, the price of the slice is increased by 1,000  yuan, and the EPS of the company is increased by 0.14 yuan. The price of  this product has increased by more than 7,000 yuan since 2017.  According to our grassroots research, its main The  raw material adiponitrile has risen more than 200 US dollars, the price  of adipic acid has risen 4,000 yuan, and the cost is estimated to  increase by 3,000 yuan according to the unit consumption. The price  difference corresponding to PA66 products has expanded significantly.
    At  the same time, it is recommended to pay attention to the company's  adipic acid products. The company is a leading enterprise in this field  in China, and its external supply is mainly adipic acid. According to the unit consumption level, the company's adipic acid rights are sold in quantities of 4 to 50,000 tons. Adipic  acid We believe that benefiting from the steady growth of downstream  demand and the continued clearing of some upstream production capacity,  18-year profitability is expected to remain high, and will also increase  the company's profit level to a certain extent.

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Xiamen Keyuan Plastic Co.,Ltd. 

Company ADD: No.27, Hongxi Road, Maxiang Town, Xiang'an District, Xiamen(361000), CHINA.

Contact : Connie Deng (Sales Manager)

TEL: +8613656020340 (Whatsapp)

SKYPE: connie11107

Email: connie@xmkeyuan.com