Since July, the caprolactam market has been influenced by wide fluctuations on the cost side, with prices showing a pattern of "rising after an initial decline, then retreating from the peak." Looking ahead to August, the caprolactam supply pattern is expected to remain tight, providing some support to prices, but the cost side remains the biggest uncertainty, and price trends are still expected to mainly follow cost fluctuations.
In July, the caprolactam market first declined and then rose, easing slightly at the end of the month. During the month, continued instability in the Middle East situation pushed crude oil prices higher, upstream feedstock pure benzene prices followed with gains, and sulfur prices remained at high levels, further intensifying cost pressure on caprolactam and providing a boost to caprolactam prices. In addition, caprolactam enterprises maintained low production loads, and with some units in Shanxi, Shandong, and Henan undergoing shutdowns and load reductions in July, the supply pattern tightened further, sustaining a tight supply situation in the caprolactam market and also supporting caprolactam prices. Supported by favorable factors on both the cost and supply sides, caprolactam prices in the East China market rose to 12,500 yuan/mt on an acceptance delivery basis. Toward the end of the month, upstream crude oil and pure benzene prices retreated, and caprolactam prices followed downward. As of July 29, the spot price of caprolactam in the East China market stood at 12,100 yuan/mt on an acceptance delivery basis.
Caprolactam Monthly Supply-Demand Balance Sheet (Unit: 10,000 mt, yuan/mt)
| Indicator | July | June | Change | Change Rate |
|---|---|---|---|---|
| Production | 52.04 | 50.5 | 1.54 | 3.05% |
| Imports | 0.8 | 0.75 | 5.00% | 6.67% |
| Total Supply | 52.84 | 51.25 | 1.59 | 3.10% |
| Downstream Consumption | 53 | 51.91 | 1.09 | 2.10% |
| Exports | 1.5 | 1.99 | -0.49 | -24.62% |
| Total Demand | 54.5 | 53.9 | 0.6 | 1.11% |
| Supply-Demand Balance | -1.66 | -2.65 | 0.99 | 37.36% |
| Period Average Price | 11770 | 11176 | 594 | 5.31% |
From the perspective of the caprolactam supply-demand pattern, both supply and demand increased slightly in July, but the industry's capacity utilization rate continued to remain at a low level. July caprolactam production reached 520,400 mt, an increase of 15,400 mt from the previous month; the capacity utilization rate was 68.15%, down 0.85 percentage points from the previous period. Caprolactam enterprises continued to operate at a loss, keeping overall capacity utilization at relatively low loads. In addition, with the shutdown of Shanxi Lubao, the shutdown of Luxi Chemical's Phase III unit in Shandong, and continued load reductions at Pingmei Shenma, the industry's overall capacity utilization rate still declined slightly, and the caprolactam supply pattern remained tight.
On the downstream side, although the overall capacity utilization rate of the downstream PA6 industry also remained low, because the caprolactam output reduction was more concentrated, the supply-demand balance remained negative in the comparison of supply and demand volumes, providing some support to caprolactam prices. However, the downstream textile sector is in the traditional off-season, with insufficient orders for spinning and modified plastics from downstream users. Moreover, terminal players maintained a risk-averse stance toward high-priced raw materials, and the transmission of high chip prices to downstream sectors was poor. The PA6 chip market faced significant resistance in following the upward trend, with cost transmission encountering greater resistance further down the chain.
Outlook:
Cost side: In August, the pure benzene supply-demand pattern is expected to weaken, with port inventories shifting from destocking to restocking, and downstream buyers showing weak willingness to follow up on high-priced pure benzene. Fundamentals are expected to exert a weakening influence on pure benzene prices. However, given the significant uncertainty in the Middle East situation, the pure benzene market trend may continue to be dominated by crude oil movements.
Supply side: The caprolactam industry continues to face losses, with producers under considerable profitability pressure and limited willingness to proactively raise operating rates. Additionally, Lunan Chemical has plans to shut down for expansion at the end of August, which will further reduce supply volumes. Overall spot supply is expected to remain tight, supporting prices.
Demand side: The spread between PA6 chips and caprolactam has remained persistently low, highlighting the operational pressure faced by polymerization plants, and there is a possibility that some polymerization units may further reduce operating rates in the future. Downstream nylon weaving remains in the traditional off-season, and terminal textile orders are unlikely to see substantial improvement in the short term. Downstream market participants remain highly cautious, with procurement largely limited to just-in-time needs and little willingness to build bulk inventories.
In summary, the tight supply situation on the caprolactam supply-demand side provides a certain floor of support for prices, but amid wide cost-side fluctuations, cost movements remain a key factor driving price trends.
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