China’s Caprolactam Industry Enters Expansion Boom

By Yu Yi and Song Chao, Information Center of Hunan Yueyang Baling Petrochemical Technology Center)

The world’s caprolactam capacity reached 5.43 million t/a in 2012, soaring nearly 20% from a year earlier. The growth was mainly in Asia, especially China. Upon the completion of new units of Shandong Haili Chemical Industry Co., Ltd, Zhejiang Hengyi Group Co., Ltd and Shandong Hongye Chemical Industry Group, domestic caprolactam capacity increased to 1.22 million t/a in 2012. It is expected to exceed 2.2 million t/a at the end of 2013 and to top 3 million t/a in 2015. However, adjustments in distribution and structure are inevitable as growing capacity will make profits lower, and competition more severe.
　As a major kind of organic chemical materials, caprolactam is mainly used in producing engineering plastics and synthetic fiber nylon (polyamide, PA). Nylon 6 resin can be made into different parts applied to vehicles, boats, electronics, machines and goods for everyday consumption; nylon 6 fiber is used in textiles, industrial yarn, silk for carpet; nylon 6 film is mostly for food packaging. In addition, caprolactam can also be used as raw materials of antiplatelet agents, 6-aminocaproic acid and laurocapram.

1. Supply is far lower than demand.
China’s caprolactam industry started in the 1950s, but it failed to achieve rapid growth in the following 40 years. In 1992, Sinopec Nanjing Chemical Industrial Co., Ltd and Sinopec Baling Petrochemical Co., Ltd each introduced a 50 000 t/a caprolactam unit from Holland DSM, and the two units were put into production a year later. In the late 1990s, Sinopec Shijiazhuang Refining & Chemical Co., Ltd constructed a 50 000 t/a unit with toluene technology from Italy. With the help of the three units, China’s caprolactam industry entered a new stage. Before 2011, China had just four caprolactam producers – Sinopec Baling Petrochemical Co., Ltd, DSM Nanjing Chemical Company, Sinopec Shijiazhuang Refining & Chemical Co., Ltd and Zhejiang Juhua Co., Ltd, and the four companies boasted a combined capacity of 590 000 t/a in 2011. But with new units put into use in 2012, domestic caprolactam capacity rose to 1.22 million t/a.
Table 1       China’s Caprolactam Production from 2008 to 2012   (kt)
Company    2008    2009    2010    2011    2012    
DSM Nanjing Chemical Company    160    170    200    200    200    
Sinopec Baling Petrochemical Co., Ltd    145    145    200    200    300    
Sinopec Shijiazhuang Refining & Chemical Co., Ltd    65    165    165    165    165    
Zhejiang Juhua Co., Ltd    15    15    15    25    50    
Shandong Haili Chemical Industry Co., Ltd    -    -    -    -    200    
Zhejiang Hengyi Group Co., Ltd (Xiaoshan)    -    -    -    -    200    
Shandong Fangming Chemical Co., Ltd    -    -    -    -    100    
Total    385    495    580    590    1 215    

   China’s caprolactam industry developed rapidly in recent years, realizing double-digit growth in both capacity and annual output. But domestic supply cannot meet the fast-growing demand, which has to be satisfied by imports to great extent.

Table 2 China’s Caprolactam Supply and Demand from 2005 to 2012  (kt)
Year    Capacity    Output    Import    Export    Apparent Consumption    Self-sufficiency Rate/%
2005    280    212    493    2    703    30.16
2006    285    291    445    0.3    735    39.53
2007    365    302    473    0.3    774    38.99
2008    380    290    450    2    738    39.27
2009    485    340    601    1.6    940    36.2
2010    585    494    631    0.6    1 125    43.91
2011    595    537    633    7.5    1 162    46.21
2012    1 215    715    707    7    1 415    50.55

2. Capacity has soared and competition is fiercer.
It is expected that domestic caprolactam capacity will add by 1 million t/a in 2013 – likely to exceed 2.2 million t/a by the end of the year.

Table 3        New Capacity in 2013    (kt/a)
Company    Original Capacity    New Capacity    Startup    
Nanjing Dongfang Chemical Co., Ltd    200    200    3Q 2013    
Hubei Sanning Chemical Industry Co., Ltd    -    100    Jun-13    
Luxi Chemical Group Co., Ltd    -    200    May-13
Xuyang Jiaohua Group    -    200    Dec-13
Shandong Fangming Chemical Co., Ltd    100    100    Oct-13
Shandong Haili Chemical Industry Co., Ltd    200    200    Jun-13
Total    500    1 000
　 New participants such as Luxi Chemical Group Co., Ltd and Xuyang Jiaohua Group brought new raw materials like coking benzene to the industry. Many enterprises plan to expand their caprolactam capacity: Sinopec Baling Petrochemical Co., Ltd (Fujian Fuqing project), Hengshen Technology Company, Zhejiang Juhua Co., Ltd, Fujian Jinjiang Petrochemical Co., Ltd, China Pingmei Shenma Energy & Chemical Group, Tongling Chemical Industry Group, etc. If these projects are completed on schedule, China’s caprolactam capacity will exceed 3 million t/a in 2015.
　 Capacity expansion will alleviate the tight supply. However, adjustments in distribution and structure are necessary, as growing capacity will make profits lower, and competition more severe. At present, caprolactam enterprises are located far from consumers, which have to import in large quantities. Most enterprises do not have a complete industrial chain. Downstream fiber sector grew rapidly, but engineering plastics and film consume just 19% of PA, far lower than the world’s average level and standard in advanced countries. Therefore, caprolactam has huge potential in the field of PA engineering plastics.
　 Caprolactam producers are advised to develop new technologies and establish production bases with advanced techniques. For example, Sinopec Baling Petrochemical Co., Ltd and Sinopec Corp Research Institute of Petroleum Processing jointly developed new green technologies, which will simplify production processes, reduce environmental pollution and reduce costs significantly.
　 Although technologies are a solid foundation of production unit construction, “blind” investment has to be avoided, and techniques regarding producing caprolactam through coal chemical process and partial hydrogenation of benzene should be promoted. Meanwhile, caprolactam producers are advised to reduce energy consumption, boost product competitiveness and improve production units. Furthermore, the caprolactam criteria applied in different market segments should be revised so that a situation of fair competition can be established.