European chemical profile: caprolactam

USES
Caprolactam (capro) is mainly used to make nylon 6 fibers and engineering plastics, accounting for about 68% and 32% of global demand, respectively. Nylon 6 fibers are used extensively in textiles, carpets and industrial yarns, with tire-cord being a large and growing market, especially in China. Nylon resins are the basis of engineering plastics, used in electronic and electrical components and automobiles, and oriented polyamide films used widely in food packaging.

SUPPLY/DEMAND
Global consultancy Tecnon OrbiChem estimates that global demand in 2010 may be 4.2% higher than in 2009. But because 2008 and 2009 demand was drastically reduced by the recession, the final number for 2010 is expected to be only 2-3% higher than 2007, the last full year before recession hit.

In Europe, overall consumption is set to rise marginally this year, as growth in engineering resin demand is fairly balanced by falling textile fiber demand as European fiber producers continue to lose market share to lower-cost Asian competitors. Clothing designers are increasingly sourcing products in China, Taiwan, Vietnam and Indonesia, where labor costs are far lower.

Tecnon OrbiChem puts West European demand and production at 0.88m tonnes and 1.19m tonnes for 2009, compared with 0.91m tonnes and 1.14m tonnes, respectively, in 2008.

EU exports to China, Taiwan and South Korea jumped to 400,000 tonnes/year in 2009, from 127,000 tonnes/year in 2008, though so far this year, exports are only 84% of 2009’s rate. China is soon to decide on possible anti-dumping action against Europe and the US. East European exports to China were 237,000 tonnes/year in 2009, up from 168,000 tonnes/year in 2008. However, even more new capro capacity in China seems certain to result in reduced imports from both the EU and Eastern Europe in the next few years.

PRICES
Capro prices usually follow developments in benzene feedstock pricing. This year, however, tight supply and strong demand from Asia – spot prices surged to near-record highs of $2,670-2,730/tonne (€1,956-2,000/tonne) CFR (cost and freight) China on November 10 – has largely prevented capro prices from following benzene’s falls.

European contracts rolled over from September into October, at €2,200-2,256/tonne ($3,004-3,081/tonne) prediscounts, despite benzene falling by €36/tonne. Producers are seeking increases in November as benzene rose by €36/tonne, but buyers are resisting the full benzene hike.

TECHNOLOGY
Most capro is produced from cyclohexane (CX) but it can also be made from phenol or toluene. CX is oxidized to cyclohexanone, then reacted with hydroxylamine sulfate to cyclohexanone oxime, followed by a Beckman rearrangement to yield capro. But this route also produces large volumes of ammonium sulfate (AS) and work is focused on reducing or eliminating the AS coproduct.

OUTLOOK
Nylon textile and fiber production in Europe will continue their steady decline, leaving European and US capro producers little alternative but to increase exports to Asia.

In Western Europe, demand for engineering plastics will maintain its growth of 5%/year for some time yet, so European demand for capro is forecast to continue growing by around 1%/year overall. Global growth is healthier and expected to be close to 3%/year.

The major issue for European producers is the continual rise in Chinese production capacity. It is also possible that China will impose antidumping duties on capro imports later this year.

EUROPEAN CAPROLACTAM CAPACITY, ‘000 TONNES/YEAR

Source: Tecnon OrbiChem

Profile last published May 12, 2008

Data provided by Tecnon OrbiChem. Email: enquiries@orbichem.com