Lead: The caprolactam and downstream chain currently face a situation of high costs and weak demand. Upstream raw material benzene prices are fluctuating with a strong tone, sulfur prices continue to rise, and rigid raw material costs are persistently strengthening. However, terminal demand for downstream PA6 chips, nylon spinning, and engineering plastics remains generally sluggish, deepening losses across the entire chain from caprolactam, PA6, to nylon.

Upstream Raw Materials Show Stronger Trends, Raising Caprolactam Costs

For benzene, although prices fell from earlier highs in May-June, the market has recently stabilized after the decline. Currently, Sinopec's caprolactam listed price remains steady at 7,700 yuan/ton. This week, spot benzene prices in the East China market are in the range of 7,600-7,780 yuan/ton. Compared to caprolactam, benzene has a larger impact on costs, and companies still face pressure from high benzene prices.

Regarding sulfur, prices have been continuously rising in 2025-2026. After March, influenced by the Middle East situation, sulfur supply and transportation were restricted, pushing prices even higher. Currently, as major domestic sulfur refineries have shifted into a mode of ensuring supply to phosphate fertilizer producers, suspending resource supply to non-phosphate fertilizer companies, expectations of tightened spot supply have intensified, and sulfur prices continue to hit new highs. Port prices in East China have surged to a high of 8,750 yuan/ton. Caprolactam companies are facing tight supply and high prices for sulfur feedstock, exacerbating cost pressure in the caprolactam industry.

Persistently Weak Demand Drags Down Prices of Caprolactam and Downstream Products

Caprolactam and downstream chain product prices peaked in April, after which end-user demand gradually weakened. From May onward, the negative feedback from the demand side intensified continuously, severely hindering cost pass-through. Prices of caprolactam, PA6, nylon fiber, and other products declined at an accelerated pace. Currently, in the East China market, spot caprolactam prices have dropped to 11,100 yuan/ton (acceptance delivery). Regular spinning-grade PA6 chips are at 11,000-11,200 yuan/ton (cash delivered), high-speed spinning chips are partly at 11,500-12,000 yuan/ton (acceptance delivery), and nylon fiber prices are also gradually declining.

Pressure on Intermediate Links Deepens Losses in Caprolactam and Downstream Chain

The entire caprolactam chain is trapped in a predicament of high costs and weak demand, with losses continuing to deepen across the chain. For caprolactam itself, high prices of upstream raw materials benzene and sulfur keep production costs elevated. However, both the product caprolactam and the by-product ammonium sulfate are seeing price declines, worsening caprolactam losses. This week, the production margin for caprolactam stands at -2,720 yuan/ton, down 267 yuan/ton from last week. The plant-level margin for caprolactam is -340 yuan/ton, down 460 yuan/ton week-on-week. For PA6, the oversupply situation in chips has become more pronounced. With high chip inventories and intense intra-industry competition, chip prices are falling faster. The price spread between PA6 chips and caprolactam is continuously narrowing; some low-priced chips even exhibit price inversion with caprolactam. As a result, PA6 losses have also expanded. PA6 profit this week is -920 yuan/ton, down 180 yuan/ton week-on-week. Nylon fiber is similarly under pressure. The textile sector lacks confidence in raw material purchases and continues to push prices down, leading to declines in both prices and profits. This week, nylon filament profit is -640 yuan/ton, down 120 yuan/ton from the prior period.

Outlook

With costs and demand moving in opposite directions, the caprolactam and downstream chain is experiencing severe losses. Looking ahead, as long as the situation in the Middle East does not rapidly ease, benzene and sulfur prices are likely to remain relatively strong. In the short term, cost pressure on caprolactam will persist. On the demand side, June-July is the traditional off-season for textiles, and the recovery of automobile consumption is relatively slow. Under these circumstances, it will be difficult for PA6 terminal demand to see a meaningful upturn, and downstream players will remain cautious in purchasing and stocking. In the short term, the contradiction between high costs and weak demand in the caprolactam chain cannot be resolved quickly, and the market is likely to continue facing downward pressure. With rigid raw material costs difficult to lower and fundamental demand-side improvement lacking, the industry will struggle to restore profitability through a demand recovery in the near future. Active production control and flexible output cuts to reduce supply, alleviate inventory pressure, and force product prices to stabilize so as to recover margins may remain the industry's main path to self-recovery.