Caprolactam: The price decline is weak and difficult to change

Since late November, due to the weakening of crude oil and benzene market, caprolactam prices have been declining, as of December 29, business agency data show that the benchmark price of caprolactam is 11,100 yuan (ton price, the same below), a decrease of 9.
29%
compared with December 1.

"Crude oil and benzene prices fluctuated slightly, support for caprolactam weakened, superimposed supply expectations increased, downstream early holidays led to weakening demand, and the short-term shock of the caprolactam market is expected to be weak
.
" Zhongyu Information analyst Liu Kaili and other industry insiders analyzed
.

Cost support is inadequate

As crude oil and benzene prices have recently fallen to the low level of the year, they cannot form a strong support
for caprolactam prices.

"From the perspective of price difference, the price difference between caprolactam and pure benzene in December was 4,800 yuan, lower than the average price difference of 5,158 yuan during the year, and the manufacturer suffered a loss
.
" Liu Kaili said
.

Since late November, the benzene market has continued to fluctuate and fall
.
According to business agency data, the reference price of pure benzene market in late December was 6,532 yuan, down 477 yuan
from November 22.
Although the pure benzene market fell widely, the prices of cyclohexanone, styrene and caprolactam downstream also fell simultaneously, and the loss situation did not improve, and the maintenance plan of the superimposed demand-side device gradually increased, resulting in an increase
in upward pressure on the caprolactam market.

Due to the closure of the Asia-American arbitrage window and sluggish European demand, most of the pure benzene exported to the United States and Europe in Asia and the Middle East turned to China, resulting in China's pure benzene imports reaching a record high of 445,400 tons in November, which in turn increased the supply pressure
of the domestic benzene market.
In addition, due to the liberalization of China's epidemic control policies, the upstream recovery speed is faster than the growth rate of terminal demand, which is negative for the pure benzene market
.

"If the price of benzene continues to fall in the later stage, the caprolactam market may be under pressure
.
" Longzhong Information analyst Zhuang Xiaohua said
.

Supply is expected to increase

According to Longzhong information monitoring data, the total domestic caprolactam production capacity in 2022 will be 5.
69 million tons, and the operating rate of caprolactam in December will be 70.
18%, and the annual output will be 3.
99 million tons
.
The downstream PA6 polymerization capacity of caprolactam is 6.
07 million tons, with an operating rate of 64.
34% in December and an annual output of 3.
9 million tons
.
From the perspective of supply and demand, the supply of caprolactam is relatively sufficient
.

Liu Kaili also said: "Recently, many sets of caprolactam plants in the north have been restarted or will be restarted
.
For example, the 150,000 tons/year plant of Xuyang Cangzhou Chemical Co.
, Ltd.
is restarted, the 140,000 tons/year plant of Shanxi Orchid Science and Technology Venture Co.
, Ltd.
and the 100,000 tons/year unit of Shanxi Lubao Group Coking Co.
, Ltd.
are planned to restart, and it is expected that the supply of caprolactam will be relatively sufficient
in the later period.
”

"From the later caprolactam plant change plan, the second phase of Luxi Group's 200,000 tons/year plant is planned to be overhauled until the end of the month, while the equipment of Orchid Technology and other enterprises is restarted, because Luxi caprolactam is basically for self-use, and Orchid Technology caprolactam is all commodity volume, so the market commodity volume will increase
.
" Zhuang Xiaohua thought
.

Weakening downstream demand

The downstream of caprolactam is relatively single, and more than 90% of the output is used to produce PA6 tablets
.
Due to the relatively low terminal demand, the PA6 market was dragged downward, and the terminal bearish impact was gradually transmitted upward, which suppressed
the caprolactam market.

PA6 downstream consumption is relatively diversified, The area with the largest consumption in 2022 is civilian fibers
.
"Due to the early Spring Festival next year, the load of downstream weaving enterprises has begun to decline, and it is currently less than seventy percent
.
And the market frequently reported early holiday news, it is expected that the market will be mainly based on just-needed procurement in the short term
.
Liu Kaili said
.

At present, the load of textile enterprises is average, and the start of nylon filament yarn has fallen in a narrow range
.
Due to the insufficient demand for PA6 chips in the fields of terminal spinning and weaving, the operation of purchasing PA6 in the field is cautious, mostly taking goods at low prices, and just need to maintain production
.

"Overall, the real demand for terminals from late December to January next year remained weak, with spinning and polymerization loads adjusted downward, and demand for caprolactam weakened
.
" Zhuang Xiaohua said
.

"With the liberalization of epidemic control policies, if the downstream confidence in the later market increases, the stocking of low-priced raw materials may also improve, but the enthusiasm for stocking will depend on the change in product prices; At the same time, the later PA6 market trend also needs to pay attention to the impact
of the price of raw materials such as benzene and caprolactam on downstream products.
Zhuang Xiaohua said
.