Caprolactam – When “price increase” comes knocking on the door

In October, the caprolactam market continued the downward trend since the end of August, while the trend of raw material pure benzene was relatively stable. Therefore, the caprolactam industry’s losses were intensifying, and the knock on the door of “price increase” seemed particularly precious.


In October, although the focus of the caprolactam market continued to decline, compared with the deep decline of the caprolactam market in April, its decline was still within a controllable range, only around 200 yuan/ton, which was also in line with Treasure Island Information’s prediction last month. At the same time, the operating rate of the caprolactam industry this month is stable at around 75%. In addition, the downstream nylon chip market is in the traditional consumption peak season, and demand support is acceptable. Therefore, the inventories of caprolactam factories are at a low level, laying a solid foundation for the joint push of mainstream factories at the end of the month. Base.
At the end of October, “price increases” finally came knocking, but whether the caprolactam market can continue to rise in the future, industry confidence is still insufficient. Because the long cold winter is approaching, the downstream industry will usher in the traditional consumption off-season, the operating rate will further decline, and the downstream demand will not be able to follow up in the market outlook. However, in the first half of the year, caprolactam factories have all undergone maintenance in turn. It is expected that factories will maintain their original operating rates until before the Lunar New Year, and then flexibly arrange equipment maintenance issues based on inventory conditions. Therefore, caprolactam factories in November had to face the trouble of continued inventory increase.
At the same time, according to statistics, Zhejiang Juhua’s 100,000-ton caprolactam unit, which was originally scheduled to restart in mid-to-early November, is reported to be restarted near October 30. By then, the caprolactam industry’s operating rate will once again approach 80%. In addition, Shanxi Orchid Science and Technology’s 100,000-ton caprolactam device will produce products normally in mid-November. It is expected that the caprolactam market in November will be oversupplied again…
In the “roller coaster” market situation of the caprolactam market this year, it is not difficult to find that what affects the market the most is not the rise or fall of the raw material pure benzene, nor the changes in downstream purchasing intensity, but the increase or decrease in market supply. Therefore, The industry pays great attention to the caprolactam industry’s operating rate and new production capacity.


As can be seen from the above figure, the caprolactam operating rate in 2016 was consistent with the overall trend in 2015, but since May this year, the caprolactam industry operating rate has been significantly lower. As of October 28, according to Treasure Island Information statistics, the average annual operating rate of the caprolactam industry in 2016 was 75%, while it was 82% in the same period last year.
According to statistics, as of the end of October, the new production capacity of caprolactam, which has been exported normally, is only 200,000 tons this year (Xu Yang and Shenma). There should be 100,000 tons (Lanhua Science and Technology) in the fourth quarter, and another 200,000 tons (Yang Yang) Coal and Lubao), is expected to be delayed until the first half of 2017. The new caprolactam production capacity has maintained low growth for two consecutive years. I believe that when the industry has been suffering losses for many years, how to control production costs and improve product competitiveness is the only choice for “the weak and the strong, survival of the fittest”.