Chemical Profile - Caprolactam

05 January 2004 00:00  [Source: ICB Americas]

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CAPROLACTAM   January 5, 2004

US PRODUCER

CAPACITY*

BASF, Freeport, Tex.

610

DSM Chemicals, Augusta, Ga.

450

Honeywell, Hopewell, Va.

800

Total

1,860

*Millions of pounds per year. Honeywell uses phenol as a raw material, while BASF and DSM Chemicals use cyclohexane. Honeywell and BASF consume most of their monomer production captively in their respective nylon operations. Earlier this year, Honeywell acquired BASF's nylon fibers production units at Anderson and Clemson, S.C., and Amprior, Ontario, Canada. The deal did not include BASF's nylon intermediates business. In mid-2001, Evergreen Nylon Recycling, a 50-50 joint venture between Honeywell and DSM that began operating in 2000, was closed. The plant had a design capacity of 100 million pounds per year of recovered caprolactam. The plant's closing was attributed to poor caprolactam market conditions and higher-than-expected production costs. Profile last published 4/16/01; this revision 1/5/04.

DEMAND
2001: 1,245 million pounds; 2002: 1,395 million pounds; 2006: 1,535 million pounds, projected. Demand equals production plus imports (2001: 12 million pounds; 2002: 45 million pounds) less exports (2001: 206 million pounds; 2002: 218 million pounds).

PRICE
Historical (1997-2002): High, $0.75 per pound, list, molten, tanks, f.o.b. shipping point; Low, $0.70, same basis. Current: $0.70, same basis. Spot: $0.50 to $0.60, same basis.

GROWTH
Historical (1997-2002): -1.6 (negative) percent per year; Future: 2.4 percent per year through 2006.

USES
Nylon-6: fibers, including monofilament, 73 percent; engineering resins and film, 27 percent.

STRENGTH
Nylon resins belong to a group of high-performance plastics often referred to as engineering thermoplastics. These materials are noted for their outstanding properties, including high tensile strength; excellent abrasion; chemical and heat resistance; and low coefficient of friction. Thus, they have particular utility in performing mechanical duties that traditionally relied on metal parts. Automobile and truck parts comprise the largest market for nylon-6 engineering resins. Automotive applications for many plastics have been driven in recent years by the trend toward replacing metal parts with plastics, thereby reducing the overall weight of motor vehicles. Automotive applications of nylon-6 resins include exterior body components (e.g., louvers, mirror housings and wheel covers), under-the-hood components (e.g., fan blades, emission control canisters, reservoirs for brake and power steering fluids) and numerous mechanical components. The consumption of nylon-6 resins for automotive applications is expected to continue at above GDP rates as designers become accustomed to using nylon instead of metal for an increasing variety of small automotive components. Other important and growing nylon-6 resin applications include: film and extrusion coatings, electrical and electronic parts, wire and cable coatings, and accessories for hardware, furniture and appliances.

WEAKNESS
In the 10 years prior to 1999, caprolactam grew at an average annual rate or 2.4 percent, but has been on the decline ever since. This is because of a drop in nylon-6 fiber production. Though the strong housing market has kept demand for residential carpeting at a high level, the demand for industrial carpeting fell because of the weak commercial construction and hotel industry markets. Production of nylon fibers dropped during the 1998-2001 period with some rebound in 2002, which has continued this year. Nylon fiber consumption in apparel has major outlets in hosiery, intimate apparel and outerwear. The use of nylon fibers in the apparel market dropped considerably during the 1990s because of the growth of lower-cost imported finished goods.

OUTLOOK
The outlook for the caprolactam industry is about average for a mature commodity chemical in the recovering economy. US caprolactam demand is projected to increase 2.4 percent per year to reach 1,535 million pounds in 2006. Caprolactam is used almost exclusively as a raw material for the production of nylon-6 fibers and resins. US production of nylon-6 fiber will increase at an average annual rate of 1.5 percent over the forecasted period, while nylon-6 resins should continue to grow at the more robust rate of 5 percent per year.





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