Introduction: Since the beginning of 2026, price fluctuations in bulk raw materials such as crude oil, pure benzene, and sulfur have continuously disrupted the cost structure of caprolactam. Meanwhile, the industry has proactively reduced operating rates, leading to a sustained contraction in supply. However, weak downstream terminal demand has placed passive pressure on the demand side, creating a core market landscape characterized by "cost disruptions overlaid with supply-demand dynamics." The market price of caprolactam rose from 9,425 RMB/ton at the start of the year to 14,400 RMB/ton in September, hitting a year-to-date high. In Q4, the market is expected to continue navigating the interplay between costs and demand, raising questions about whether caprolactam prices can sustain these elevated levels.
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From January to September 2026, the average domestic price of caprolactam reached approximately 11,785 RMB/ton, representing a year-on-year increase of about 25%. The market performance during the first three quarters exhibited a pattern of "recovery – surge – correction – secondary surge."
The first phase was the value recovery period at the beginning of the year. Following concentrated production cuts in November 2025, the supply-demand balance gradually improved, initiating a fluctuating recovery trend for caprolactam prices. At the start of 2026, market prices oscillated within the range of 9,200–9,500 RMB/ton.
The second phase was the cost-driven surge period. Geopolitical conflicts involving the US and Iran triggered significant volatility in international crude oil and pure benzene prices in March. Caprolactam prices followed this upward trajectory, driven by cost-side pressures. By early April, market prices climbed to 13,500 RMB/ton, marking a phased high.
The third phase was the negative feedback decline period. From April to July, the market dynamic reversed. On one hand, geopolitical tensions in the Middle East eased, loosening upstream cost support; on the other hand, transmission of price increases to downstream products was hindered, with weak terminal demand exerting negative feedback upwards. Amidst multiple bearish factors, caprolactam prices continued to fall, dropping to a phased low of 10,900 RMB/ton in early July.
The fourth phase was the secondary surge period. After July, prices of upstream pure benzene and sulfur rebounded again, restoring cost support. Simultaneously, concentrated maintenance shutdowns across caprolactam plants heightened expectations of supply contraction, pushing prices higher once more. In early September, caprolactam prices rose to 14,400 RMB/ton (acceptance delivery). By late September, as some previously shut-down units restarted, supply increased, causing market prices to gradually retreat to 13,800 RMB/ton.
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In 2026, the profitability of the caprolactam industry saw a slight improvement compared to 2025, though with distinct phase-based differentiation. From January to September, the average gross margin for caprolactam units was 278 RMB/ton.
Regarding phased trends: From January to April, profitability recovered temporarily due to tight supply support. After mid-May, rising sulfur prices and declining ammonium sulfate prices squeezed industry margins, leaving most caprolactam units in a loss-making state for much of the time. From late August onwards, the supply landscape tightened, product prices surged rapidly, and unit profitability significantly repaired. In September, market prices hit new highs, further boosting industry profits slightly.
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Domestic total capacity for caprolactam stands at 8.26 million tons. Total output in the first three quarters was 4.8 million tons, resulting in an overall capacity utilization rate of 71.89%, indicating that the industry primarily operated at low loads. Specifically, the capacity utilization rate fell back to 69% in September, with monthly output reaching 512,600 tons, a low point for the year. Throughout the year, industry players generally maintained lower operating rates, with capacity utilization long hovering in the 70%-80% range. This effectively contracted market supply, providing core support for prices.
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From January to September 2026, the caprolactam industry presented a landscape of "simultaneous decline in supply and demand, with supply contraction being more pronounced." Total caprolactam output decreased by 6.2% year-on-year, while total supply volume dropped by 6.7%. Domestic total consumption declined by only 3.17% year-on-year. This differential in contraction magnitude drove continuous destocking within the industry. For most months of the year, the market experienced undersupply, directly supporting a trend where prices were easy to rise but difficult to fall. In September, the supply-demand balance remained tight, with average prices maintaining high levels. However, towards the end of the month, market supply gradually recovered, leading to a marginal loosening of the tight equilibrium.
Cost Perspective: Cost factors continue to introduce significant uncertainty into the caprolactam market. Persistent risks in the Strait of Hormuz provide floor support for oil prices; however, global economic weakness, expectations of OPEC+ production increases, and Federal Reserve monetary policies cap the upside potential for oil. Crude oil prices in Q4 are likely to fluctuate broadly within the $80–$105/barrel range. Regarding pure benzene: The market is currently running at high levels, with Sinopec's posted price for pure benzene raised again to 9,900 RMB/ton. In October, pure benzene prices remain supported by partial maintenance reductions and low inventory levels. However, in November and December, fewer maintenance shutdowns combined with downstream off-season demand may exert downward pressure on prices, which will follow crude oil trends.
Supply-Demand Perspective: Based on current maintenance schedules: Lunan Chemical has been shut down for maintenance since September 5 for approximately 50 days, with a restart expected in October. Yangmei Taihua has recently restarted. Caprolactam output in September is estimated to be at a low level, but supply will recover after October. According to Chempricehub statistics, the supply-demand gap for caprolactam in September was -3,200 tons, remaining tight, though the deficit has narrowed significantly. In October, if enterprises maintain current production plans without additional reductions, caprolactam output may rebound to 563,000 tons, shifting the supply-demand gap to +25,000 tons, indicating a temporary easing of the supply landscape. However, looking ahead to November and December, planned maintenance at facilities such as Fujian Yongrong and Tianchen Yaolong suggests that caprolactam may return to a tight equilibrium balance.
Summary: Overall, the Q4 caprolactam market will undergo dynamic adjustments. With cost-end volatility at high levels and weak demand-end performance, the market is likely to exhibit a pattern of "oscillation within a high range, stronger in early Q4 and weaker later." Upside potential is suppressed by downstream negative feedback, while downside risks are cushioned by crude oil and pure benzene costs, as well as low caprolactam operating rates. October will see intense bargaining dynamics, while November and December will face gradual pressure due to the terminal off-season and raw material volatility. Under the influence of high cost pressures and supply-demand tug-of-war, caprolactam prices are expected to oscillate within the range of 12,000–14,500 RMB/ton.
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