By Yan Feng

Caprolactam (CPL) is mainly used in the production of PA6 fiber (nylon) and nylon 6 (PA6) engineering plastics and films. It can also be applied to the production of anti-platelet drugs such as 6-aminocaproic acid and laurel. At present, the raw materials for industrial production of caprolactam mainly include cyclohexane, phenol and toluene. The industrial production processes mainly include cyclohexanone-hydroxylamine process, cyclohexane photonitrosation process and toluene (SNIA) process, among which cyclohexanone- hydroxylamine process is the main production process.

Capacity

   As of the end of August 2018, there were 17 manufacturers of caprolactam in China with a total capacity of 3.67 million t/a. China's caprolactam production facilities are mainly concentrated in East China and Central China. In 2018, the production capacity of East China (Shandong, Jiangsu and Zhejiang) was 1.65 million t/a, accounting for 44.96% of the total domestic production capacity; the capacity of North China (Hebei and Shanxi) was 800 kt/a, accounting for 21.8% of the total; the capacity of Central China (Hubei, Hunan and Henan) was 540 kt/a, accounting for 14.71% of the total capacity; and the capacity of South China (Fujian) was 680 kt/a, accounting for 18.53% of the total. The manufacturers of caprolactam in China in 2018 are shown in Table 1.

Table 1   China’s major caprolactam producers in 2018

Import

   According to customs statistics, China’s import volume of caprolactam in 2017 was 237.4 kt, a year-on-year increase of 7.47%. Imports are mainly from Russia, Japan, Belgium and Poland. In 2017, imports from these four countries were 206.3 kt, accounting for 86.90% of the total imports, up 10.38% year-on-year.

Consumption Structure

   In 2017, the apparent consumption of caprolactam in China was 2.4124 million tons, an increase of 15.11% year-on-year. The average annual growth rate of apparent consumption in 2012-2017 was 11.25%.

   In recent years, there has not been new applications for caprolactam, and its major downstream markets are still civil yarn, film and engineering plastics, cord fabrics, etc. However, the proportion of consumptions of various fields has changed greatly. The proportion of civil yarn declined slightly, from 60% in 2012 to 52% in 2017, while the proportion of film and engineering plastics increased from 18% in 2012 to about 23% in 2017. With the steady development of the economy, the demand for PA6 from sectors like textile, automotive, electronics, transportation and other industries has been increasing, making the PA6 polymerization units expand in recent years, which will increase the demand for caprolactam. In addition, the current proportion of engineering plastics and film consumption in China is far below the world average, and there is a large room for development in the future. The total demand for caprolactam in China is expected to exceed 3 million tons in 2022.

Price

   The market price of caprolactam is mainly affected by the price of benzene and the demand for PA6 fiber, PA6 film and resins, and the price fluctuations. Since 2017, due to the stricter environmental protection supervision, unit shutdown, rising prices of benzene, relatively strong downstream demand, and the increase in prices of imported products, caprolactam market prices have experienced a wide range of fluctuations, with the annual average price at RMB15 519/t, up 25.86%. From January to June 2018, the market prices generally remained at a high band of RMB16 040-16 900/t. It is expected that in the coming period, due to the increase in domestic supply and relative stability of downstream demand and the price of upstream raw materials, the prices of caprolactam will not rise sharply.

Development

   In the next few years, China’s new capacities include 100 kt/a from Zhejiang Baling Hengyi, 100 kt/a from Shandong Fangming Chemical, 100 kt/a from Hubei Saning Chemical, 200 kt/a from Inner Mongolia Qinghua Group, 600 kt/a from Fujian Yongrong Technology Company, 600 kt/a from Fujian Shenyuan New Materials, 400 kt/a from Fujian Jinjiang Petrochemical, 200 kt/a from Pingmei Shenma Group, 100 kt/a from Zhangzhou Xuyang Chemical, and 200 kt/a from Jiangsu Sanding Petrochemical Technology Company. It is estimated that the total capacity of caprolactam in China will exceed 6 million t/a in 2022.

   With the diversification of investment entities, the proportion of state-owned enterprises will gradually decrease in China’s caprolactam market, and the proportion of private and joint ventures will become larger and larger, which will gradually become the main sources of caprolactam supplies. The shortness in Fujian and Jiangsu will continue to be eased.

   PA6 fiber and PA6 resin are still the main consumption areas of caprolactam in China, but the demand for caprolactam from PA6 fiber will slow down, and PA6 resin will become the main driving force for the future development. Meanwhile, caprolactam will also be at risk of being replaced by other products: competitions with polyester products in the field of civil yarn, competitions with radial cord polyester cord fabrics in the field of bias tire cord fabrics, and competitions with polytrimethylene terephthalate (PTT) in the field of carpet yarns.

   Although the capacity of caprolactam will continue to grow, the products are still in the middle and low end in terms of quality, and most of the civil yarn high-speed spinning factories have relatively high requirements on raw materials. The output of high-quality products cannot meet the actual domestic demand and imports are thus still needed. However, the import volume will gradually decrease.

   With the continuous increase of capacity, China's caprolactam industry is heading for the stage of oversupply, and, coupled with serious homogenization of products, the caprolactam companies will be forced to enter an era of meager profit, and the market competition will become intense.