The era of high profits in the caprolactam industry may be far away

Source: China National Chemical News Time: 2020-01-17

In the just past 2019, the former star product caprolactam went down the altar and fell into a loss quagmire. This cannot help but sigh, the era of high profits in the caprolactam industry may be far away.
The author believes that there are three main reasons for the deep loss of the caprolactam industry:

First, the pressure of overcapacity appears.
In 2019, the original domestic production capacity of caprolactam is set at 1.23 million tons per year. However, in view of the unsatisfactory market situation, many companies have postponed the commissioning schedule. During the year, only Fujian Jinjiang Technology's 200,000 tons/year device was put into production. The average load is currently about 80%, and Hebei Xuyang's 100,000 tons/year device is expanded to 150,000 tons/year, Baling Hengyi added 100,000 tons/year capacity device. In addition, due to the restrictions of domestic environmental protection and safety policies, the start of construction of some enterprises has been greatly affected. For example, Jiangsu Haili 200,000 tons/year device has been parked on March 26, 2019. 10,000 tons/year production line. But even so, the current capacity of caprolactam is still 3.99 million tons per year, an increase of 1.32 million tons from 2016. The overall utilization rate of the enterprise's production capacity is only about 70%, and the pressure of excess capacity is gradually showing.

Second, corporate profits have shrunk dramatically.
Throughout 2019, although the overall price of raw material pure benzene fell sharply compared with 2018, the market continued to rise in the second half of the year, and the caprolactam market was contrary to the trend of raw materials. The price continued to fall and hit a new low of nearly three years. To squeeze.

From the perspective of profit, the profit of caprolactam companies maintained a high level in 2018, with an average profit of 3231.7 yuan/ton. In 2019, the average profit of caprolactam companies was only 986.8 yuan/ton, a decrease of 69.46% over the previous year, especially near the end of the year, the loss amount was as high as 1400 yuan/ton.

The third is the continued sluggish demand.
Downstream demand continues to show weakness, which is also an important factor to suppress the profit margin of the caprolactam market.
In 2019, the new capacity of downstream nylon chips increased by 690,000 tons/year. It seems that the demand for caprolactam has increased, but the terminal demand is weak. The overall start of polymerization enterprises has remained at a low level, and the demand for caprolactam is unlikely to increase significantly.

Moreover, the repeated trade between China and the United States has also affected the terminal textile market, and the foreign trade orders are weak. Therefore, the enthusiasm for downstream chipmakers to start construction is low, and the demand for caprolactam is low, which leads to the continued expansion of the contradiction between supply and demand.