Product profile: Caprolactam

08 September 2003 00:00  [Source: ICB]

World markets are still struggling with oversupply and poor demand. Europe must find a way to compete with China's dominance of the textiles sector

Uses

Caprolactam is primarily used in the production of nylon 6 fibres and resins. About 74% of output is consumed in nylon fibres with the rest used in engineering resins. Nylon 6 fibres are made into textile, carpet and industrial yarns. Nylon resins are used in engineering plastics with applications in the automotive industry, electronics and industrial components, and films for food packaging. Small amounts of caprolactam are also used in cross-linking for polyurethanes and in the synthesis of lysine.

Supply/demand

Global markets continue to suffer from excess capacity and poor demand into the fibres sector. Demand in Europe this year is expected to be lower than last. Latest figures show that nylon 6 and 6,6 output in Europe (including Turkey and the CIS) is down by about 3% for the first five months of 2003. Nylon 6 is also facing much competition from nylon 6,6 which is no longer sold at a premium. In addition, the carpet sector is having a particularly bad time in Europe as the trend for hard flooring tears into its market share.

European exports to Asia have been hit by a strengthening euro and have also suffered from China's imposition of anti-dumping duties on imports from Belgium, Germany, Netherlands, Russia and Japan.

Pricing

European prices have been pressured by high feedstock costs this year. Margins have not improved and remain very poor. Quarter three contract prices fell on the back of the E209/tonne slump in benzene feedstock costs and are mostly in the range of E1100-1200/tonne FD NWE. This represents an average reduction of E150-200/ tonne on quarter two contracts which rose by E100-150/tonne to E1300-1350/ tonne. Feedstock prices are now firming again and could push caprolactam prices higher in quarter four.

Technology

Most production is based on cyclohexane but can also be made from phenol or toluene. Cyclohexane is oxidised to cyclohexanone, then reacted with hydroxylamine sulphate to give cyclohexanone oxime, followed by a Beckmann rearrangement to yield caprolactam. However, large amounts of ammonium sulphate are produced and development work is focused on reducing or even eliminating this by-product. DSM's HPO-plus process has substantially cut output of ammonium sulphate to 1.5 tonne per caprolactam tonne, compared to up to 4.5 tonne per caprolactam tonne.

The first commercial process to completely eliminate ammonium sulphate production is the EniChem/Sumitomo route that combines EniChem's new cyclohexanone oxime technology with Sumitomo's new gas-phase Beckmann rearrangement. A 65 000 tonne/year plant based on this technology started up in April at Sumitomo's Niihama site in Japan. BASF, DSM and Rhodia have developed butadiene-based processes without ammonium sulphate production, but none have been commercialised.

Health and safety

Caprolactam is a white, hygroscopic, crystalline solid with a distinctive odour. It is combustible 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

Producers are hoping that demand will recover next year, but Europe is suffering from cheap textile imports from Asia and needs to find a competitive edge. The situation will not be helped by the removal of China's textile export quotas post-2005, when its growing share of the world market is expected to rise further.

Tecnon OrbiChem forecasts global growth for caprolactam at less than 2%/year to 2010, by when world capacity will reach 4.98m tonne with production at 4.56m tonne. World fibres demand will grow at below 1%/year, while consumption into resins will grow at 4.3%/year, predicts Tecnon OrbiChem.

Projects planned in Europe include Spolana's expansion to 80 000 tonne/year by late 2004, and PQM's increase to 100 000 tonne/year. The status of Capro Schwedt's plans for a 110 000 tonne/year unit in Germany is unclear following the reduction in state aid for the project. Several plants are planned for China including DSM's joint venture in Nanjing for a 140 000 tonne/year facility to start production in 2005.

European caprolactum capacity, '000 tonne/year

Company	Location	Capacity
Aquachemia	Zilina, Slovakia	28*
Azot Cherkassy	Cherkassy, Ukraine	50
Azot JSC	Rustavi, Georgia	50
BASF	Antwerp, Belgium	280
	Ludwigshafen, Germany	160
Bayer	Antwerp, Belgium	165
Domo Caproleuna	Leuna, Germany	100
DSM	Geleen, Netherlands	250
Electrochimprom	Chirchik, Uzbekistan	80
EniChem	Porto Marghera, Italy	130*
FibrexNylon	Savinesti, Romania	40*
Grodno Azot	Grodno, Belarus	120
JSC Kuibyshevazot	Togliatti, Russia	120
Kemerovo Azot	Kemerovo, Russia	125
PQM	Castellon, Spain	85
Schekinoazot JSC	Shchekino, Russia	50
Spolana	Neratovice, Czech Republic	48
ZA Pulawy	Pulawy, Poland	60
ZA Tarnow	Tarnow, Poland	77
* not operating
Source: ECN/CNI

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