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HOUSTON (ICIS)–AdvanSix is concerned about fair trade in nylon 6 and may bring a legal case against China’s exports to the US, Erin Kane, CEO of the US-based integrated nylon 6 producer, said on Friday.
China’s slower economic growth prompts producers there to move product to other regions, pressuring nylon 6 pricing, Kane told analysts during the company’s Q2 earnings call.
China’s exports were at an all-time high and AdvanSix was seeing “acute challenges” from this in the engineered plastics business, she said.
In addition, there were impacts on markets for plastics engineered compounds made of nylon 6, “pressuring and competing with our customers”, she said.
For context, she noted that China’s exports were at about three times the capacity of AdvanSix’s nylon 6 plant in Chesterfield, Virginia. Chesterfield’s capacity is 440m lb/year, according to the company’s website.
With regard to a potential trade case, “we want to keep all our options open”, she said.
“Ensuring fair trade practices is important to us as we continue to monitor the industry dynamics,” she said, adding: “Our assessment is underway.”
At the same time, AdvanSix is monitoring China’s exports of nylon’s precursor products, caprolactam and ammonium sulphate (AS), she said.
Unfavourable market-based pricing and narrowing price-raw spreads in nylon, but also in caprolactam and AS, weighed on AdvanSix’s Q2 results.
The company produces caprolactam to make nylon 6 resin. It markets and sells the caprolactam it does not consume internally.
AS is a co-product of the caprolactam production process.
Both caprolactam and AS are important products for AdvanSix, accounting for 18% and 32% respectively, of the company’s Q2 sales of $428m.
US INDUSTRIAL RECESSION Asked by an analyst whether the US is in an industrial recession, Kane said that there were indications that this is may be the case.
She noted that US manufacturing shrank for a ninth straight month in July and also pointed to continued destocking and reduced operating rates in the chemicals sector.
OUTLOOK Regarding the near-term market outlook, AdvanSix noted:
AdvanSix, results for the three months ended 30 June:
Thumbnail photo of AdvanSix CEO Erin Kane; photo source: AdvanSix
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