Caprolactam

12 November 2001 00:00  [Source: ICB]

Global markets are depressed and prices are falling. Future demand from the mature fibre sector remains low, but resins have a brighter outlook

Uses



Caprolactam is an intermediate primarily used in the production of nylon 6 fibre (90% of output) and resins (10%). Nylon 6 fibre is used in carpets, clothes, hosiery and industrial textiles. Resins are used for moulding, film and coatings. It is also used in cross-linking for polyurethanes and in the synthesis of lysine, an amino acid.

Supply/demand



Markets are suffering from poor demand and historically low prices and margins as the economic downturn continues. Tecnon OrbiChem estimates apparent world consumption will drop by 11% this year, compared to 2000. Asian markets are weak with less imports from Europe. Strikes mid-year at Korean nylon operations also reduced import volumes. Operating rates are being reduced, mostly to 80%, but in some cases down to the technical minimum of 70%, says Tecnon. Rates averaged 95% last year and global demand growth was 5%. Enichem's Porto Marghera plant was sold in September to RadiciNylon which has also taken an 88% stake in Romania's Fibrex. Fibrex closed its unit in July because of poor market conditions.

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Pricing



European prices have declined throughout 2001, often to below cash production costs, as excess supply, poor demand and falling feedstock costs exert downward pressure. Quarter four prices have dropped by about E100-120/tonne. Contracts are quoted in the range E1080-1120/tonne compared to quarter three's level of about E1200/tonne. In Asia, quarter three import contracts into South Korea and Taiwan finally settled at $950-970/tonne CFR, although some buyers are still holding out for lower prices, says Tecnon. Spot levels in late October were around $805-810/tonne CFR. Quarter four discussions hover around $900/tonne with one report of a settlement at $850/tonne.

Technology



Most caprolactam is produced from cyclohexane, although a small amount is derived from phenol or toluene. Cyclohexane is oxidised to cyclohexanone, then reacted with hydroxylamine sulphate to give cyclohexanone oxime, this is followed by a Beckmann rearrangement to yield caprolactam. However, large amounts of aluminium sulphate are produced and development work is concentrating on eliminating this. BASF and DuPont have developed a process starting from butadiene via adiponitrile. DSM and Shell are developing technology (Altam) using butadiene and carbon monoxide feedstocks. Enichem is combining its direct ammoximation technology with Sumitomo's gas-phase Beckmann rearrangement. Sumitomo will install the new process in a 90 000 tonne/year plant in Ehime, Japan, with startup due in 2003. Caprolactam from recycled nylon 6 at Evergreen (DSM/Honeywell)'s plant in Augusta, US, has stopped indefinitely due to higher than expected production costs.

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Health and safety



Caprolactam is a white, hygroscopic, crystalline solid with a distinctive odour that is soluble in water, cyclohexane and chlorinated hydrocarbons. It is combustible, giving off irritating or toxic fumes in a fire, and reacts violently with strong oxidants. The vapour irritates the eyes, skin and respiratory tract and inhalation may affect the central nervous system and liver.

Outlook



Caprolactam's future is entirely dependent on demand for nylon. Tecnon expects world demand to show long-term growth of 1.5-2.0%/year for nylon 6 fibre and 5-6%/year for engineering resin, giving an overall growth rate of 2.5%/year. Growth for 2002 will be lower due to the recession expected in the US and the knock-on effect on the world economy, especially for textile companies in Asia that are oriented towards exports to Europe and the US. However, Tecnon forecasts above average growth in 2003-2004 as recovery starts and inventories are rebuilt.

EUROPEAN CAPROLACTAM CAPACITY, '000 TONNE/YEAR



Company Location Capacity
Agrobiohim Stara Zagora, Bulgaria 30*
Azot Cherkassy Cherkassy, Ukraine 50
Rustavi, Georgia 50
BASF Antwerp, Belgium 280
Ludwigshafen, Germany 140
Bayer Antwerp, Belgium 180
Domo CaproLeuna
Leuna, Germany 100
DSM Geleen, Netherlands 250
Fibrex Savinesti, Romania 40*
Grodno Azot Grodno, Belarus 120
JSC Kuibyshevazot
Togliatti, Russia 110
Kemerovo Azot Kemerovo, Russia 125
Navoi Azot Circik, Uzbekistan 80
Povazske Chemicke Zavody
Zilina, Slovakia 28
Proquimed Castellon, Spain 85
RadiciNylon Porto Marghera, Italy 130
Shchekino Azot
Shchekino, Russia 50
Spolana Neratovice,
Czech Republic 48
ZA Pulawy Pulawy, Poland 60
ZA Tarnow Tarnow, Poland 77
*currently closed
Source: ECN/CNI



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