Declining Feedstock Benzene Costs Drive Down Caprolactam Prices Across the Globe

The price of Caprolactam witnessed a declining pattern at the end of the second quarter of 2023 in the global market due to the gloomy trading activities among enterprises. Caprolactam is a key chemical intermediate used in producing Nylon 6, which has applications in various industries such as textile, automotive, electronics, and packaging.

The price of raw materials used in Caprolactam production, such as Benzene and Cyclohexane, has been subject to fluctuating downturns. These price dynamics of raw materials can impact the overall cost of Caprolactam production and influence the market prices of Caprolactam and Nylon 6.

In Germany, the business conditions across the German market took a turn for the worse in June, with faster declines in both activity and new orders amid a backdrop of rising interest rates, customer uncertainty, and wider inflationary pressures, indicating the demand for Caprolactam in the textile industry remained bearish in the German market. Over the past seven days, the textile industry has dropped by 2.8% across the German market.

In India, the Caprolactam market followed the same price pattern due to low demand conditions among enterprises. The Indian fabric enterprises rely on domestic demand due to slower export orders from the overseas market, which will continue until August 2023. Further, the festive season will now no longer start in August 2023. The textile industry, eagerly anticipating the start of the season, is worried about any potential delays in the anticipated increase in demand. Merchants from the textile industry are expected demand will rise in September 2023.

On the other hand, the US Caprolactam market showed a bearish pattern due to high-interest rates and weakened global demand for the product. The decline in new export orders in June was generally rapid, despite slowing from that recorded in May 2023. Some companies have also noticed that adequate customer inventory levels have led to fewer new orders. Overseas sales had dropped notably, and the domestic market deteriorated during the second quarter's last month. The buyers were cautious and took a wait-and-see approach, engaging only in need-based purchases. As per ChemAnalyst, the cost of Caprolactam hovered around USD 2374/MT on a FOB Texas basis at the end of the second quarter of 2023.

Sluggish global economic development, decreasing global trade and investment, geopolitical uncertainties, and declining external demand continue to influence overseas markets. The above factors indicate that Caprolactam prices might fluctuate in the overseas market.