CHEMICAL PROFILE: Caprolactam

16 October 2006 00:00  [Source: ICB Americas]

CHEMICAL PROFILE: CAPROLACTAM

DEMAND

2004: 1.51bn pounds 2005: 1.485bn pounds 2009: 1.5bn pounds, projected. Demand equals production plus imports (2004: 1.4m pounds 2005: 1.1m pounds) less exports (2004: 277m pounds 2005: 321m pounds).

GROWTH

Historical (2000-2005): 0.4% per year. Future: 0.2% per year through 2009.

PRICE

Historical (2000-2005): High, $1.10 per pound, aver., market, flake, f.o.b. shipping point Low, $0.47, same basis. Current: $0.94, same basis. Source: USITC

In the US, the merchant market is small and most transactions are made up of long-term contracts based on formula pricing.

USES

Nylon-6: fibers, 71% engineering resins and film, 29%. Source: ICIS Chemical Business Americas

MARKET PERSPECTIVE

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 in 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.

Overall demand for caprolactam, however, has been in slow decline over the past decade. This is due to 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 has fallen because of the weak commercial construction and hotel industry markets. And recently, even the housing market is retreating. The Census Bureau reported that housing starts in August 2006 were down 6.0% from July and down 19.8% from August 2005. Building permits were down 2.3% and down 21.9% from one year ago.

OUTLOOK

The outlook for the caprolactam industry is about average for a mature commodity chemical. US nylon-6 resin demand is growing at 3% per annum, but this is nearly offset by the 1% decline in the fiber sector, which is almost three times as large. Aggregate US caprolactam demand is projected to increase 0.2% per year to reach 1.535bn pounds in 2009. Global demand, however, is increasing 2-2.5% per year, which is attributed to Asian activity, mostly in China.

US MEK CAPACITY, millions of LBs./year

Company Location Capacity
BASF Freeport, Tex. 610
DSM Chemicals Augusta, Ga 450
Honeywell Hopewell, Va. 800
TOTAL 1,860SOURCE: ICBA

*Million lbs./year. Conventional caprolactam technology is based on the key intermediate cyclohexanone, which is usually produced by the oxidation of cyclohexane, but can also be made from phenol or toluene. Separately, hydroxylamine sulphate is manufactured by the oxidation of ammonia to nitrous oxide followed by hydrogenation in the presence of sulphuric acid. The hydroxylamine sulphate is then reacted with the cyclohexanone to produce cyclohexanone oxime. This is followed by a Beckmann rearrangement using oleum to yield caprolactam. Honeywell uses phenol as a raw material, while BASF and DSM use cyclohexane.

In October 2005, Honeywell completed the sale of its US nylon carpet fibers business to Shaw Industries Group, a subsidiary of Berkshire Hathaway. Honeywell sold its nylon fiber manufacturing operations in Anderson, Clemson, and Columbia, S.C., and its 50% stake in Evergreen Nylon Recycling, based in Augusta, Ga. As part of the deal, Honeywell agreed to supply Shaw with caprolactam and nylon resin.

Earlier this month, Honeywell announced that it was expanding caprolactam capacity at Hopewell, Va., by 10%, to meet growing demand in the merchant market.


For the latest market prices and reports on more than 120 commodity chemicals from the leading independent pricing and market intelligence service, please visit ICIS pricing at www.icispricing.com

Profile last published January 5, 2004
 





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