Summary
BASF's closure of the nylon 6 plant in Rudolstadt, Germany is reflective of the broader global trends affecting nylon - slower demand growth that is shifting toward China and away from Europe and North America.
Analysis
The closure of the BASF plant in Rudolstadt, Germany is consistent with the global trends in the nylon industry as consumption for nylon shifts toward Asia, especially China. Demand for nylon is forecasted to track close to global GDP for the long-term, but the bulk of that growth will be in developing economies where the economics of fiber manufacture and engineered part molding are more favorable.
Furthermore, the growth rate for nylon demand has slowed in recent years as other materials compete with nylon, including lower cost polypropylene and polyester.
BASF has been quick to point out their European nylon 6 production will now be focused on two existing plants, one in Belgium and the other in Germany, where they have better scale and backward integration. Again, this is consistent with the realities of the nylon market as it reaches maturity forcing manufacturers to consolidate to their lowest cost plants.
Michael Brown consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
