Nylon 6,6: A Retrospective Review, and What Lies Ahead

Things really took a turn for the worse for nylon 6,6 markets in 2018, with the year characterized by a series of force majeures declarations. This was attributed to supply shortages in a key raw material, Adiponitrile (ADN), with facilities idling amid disruption from Hurricane Harvey entering the Texas gulf coast in 2017, heatwave drying up the Rhine River in Europe, freezing weather interrupting operations in Alabama, and a series of outages in Europe, really hitting one after another. ADN supply has always been an obstruction for nylon 6,6 producers; unlike other raw materials, its supply globally is very limited, boiling down to only three major producers: INVISTA, Ascend, and Butachemie (a joint venture between BASF and INVISTA). High barriers to entry have always weighed on the potential of a newer supply: production facilities of the material are hazardous and technologically challenging, not to mention are also very costly to build. Getting such plants up and running after getting hit by unforeseen circumstances takes a long time.

But ripple effects from the blow wouldn’t have impacted producers and buyers as much, had the nylon 6,6 demand remained quiet and soft. Consumption has been steadily rising over the past few years, with an aggregate growth of nearly 3% every year. Automotive, which is the material’s largest outlet, representing more than half the demand, has seen a sizeable growth, especially with the sector’s transition towards light-weighting, replacing metal components and switching to lighter thermoplastics. Market participants were already warning & worrying about a supply crunch situation, and their worse dreams finally came true.

ADN producers’ plight amid this downturn could be summarized in one word: helplessness. This wasn’t any other situation that could be handled under normal conditions; extraordinary events amid tight raw material conditions left producers struggling, as they had insufficient inventory to cushion the shock.

With limited production and no newer immediate capacity addition in sight, what ensued in the aftermath was a sharp spike in prices, both in intermediate materials like HMDA and end-product nylon 6,6. Producers prioritized supplies only to cooperative long-term customers, buyers were forced to cope with longer lead times, and traders began selling available stocks at elevated prices. Processors began exploring alternative materials like nylon 6, which also happens to be cheaper than nylon 6,6. Success from this could only contribute so much, however, since the rate of attaining the desirable nylon 6,6 properties from nylon 6 is less than 20%. For instance, property-wise speaking, nylon 6 begins deforming at 220oC, compared to nylon 6,6, which deforms at 260 oC. Nevertheless, the move certainly did provide temporary relief, with the spike in requirements even boosting the demand for nylon 6.

Market participants struggled for a good two years, before a much-needed turning point came in 2020. Supply snags eased up to a considerable extent during this year, when INVISTA expanded its production capacity, both at its independent facility in the U.S. and at its joint venture facility in France. Further, supply disruptions in the auto sector during the COVID-19 pandemic also led to the softening of nylon 6,6 demand, letting ADN catch up to balance the market.

Force majeure events again troubled markets in 2021, with both INVISTA and Ascend Performance Materials announcing the curtailing of nylon 6,6 supplies, owing to the damage from power outages and extreme weather events in USA.

What Lies Ahead

Market prices from the economic downturn following the Russia-Ukraine war have grown significantly. With elevated crude oil & energy costs and downstream markets grappling losses, nylon 6,6 has become very expensive for buyers. Prices in China have more than doubled, reaching the 50,000 yuan/MT mark in a very short period.

Future paints a glass half full picture, however, with rising opportunities. Newer supply additions, including INVISTA’s new 400 kilo tons / annum plant in China was realised in 2022. China, which struggled with entering the market and relied on foreign imports, has marked a historic milestone in overcoming the technological barrier, building its first self-developed ADN facility: Zibo Qixiang Tengda Chemical’s 200 kilo tons/annum butadiene-route plant, which also came on-stream in 2022.

Notable changes are now evident in the market. Prices quoted by traders are significantly above from plant offers and buyers, who were earlier accepting these offers have now begun to bargain. Sufficient raw material availability has reversed market mentality. To conclude, raw material supply issues will ease, and with more players & plants entering the market, nylon 6,6 prices are expected to at least remain steady, and even come down. From a producer’s standpoint, many remain cautiously optimistic, as they have taken a wait-and-see stance. Something they will have to look for in the market would be a possibility of a situation where the additional capacity would be absorbed by the growing demand, following which things may again escalate.

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