Regressing Caprolactam Market in South Korea

South Korea: This month, the South Korean market saw a bearish trend for Caprolactam, and prices were almost unheard of as most producers struggled with losses. Caprolactam prices were hovering around USD 2110.00/ton-USD 2256.00/ton Caprolactam FOB Busan with a weekly fall of 0.5%. Japan has recently put forward an export restriction on exporting Caprolactam to South Korea. The zero-lockdown policy and labours day holidays affected China's market, shutting the manufacturing units. This is posing an equal threat to the companies in South Korea.

The price fall was in line with the poor demand trend from downstream Nylon-6 and other synthetic fibre sectors, coupled with sufficient product availability in the South Korean market. FOB Korea ethylene prices were noted around USD 1145-1155/MT CFR levels, a week on week fall of USD (-10/MT). In-plant news, Lotte Chemical has shut down its cracker unit for maintenance turnaround on the first week of May. With the plant located at Yeosu in South Korea, the cracker had an ethylene production capacity of 1.2 million MT/year, which had affected the Caprolactam market severely with a drastic fall in the market sentiments.

Mitsubishi Chemical shut its cracker last week for a maintenance turnaround in other plant news. The cracker is slated to remain latched for about two months. Located at Kashima in Japan, the cracker has a 539,000 MT/year ethylene production capacity, supplying its products to the South Korean market. The downstream automotive parts, synthetic fibres, pharmaceuticals, and a significant portion of engineering plastic enterprises had observed weak market sentiments with lower demand.

The freight costs are also unpredictable and volatile due to the Russian invasion of Ukraine, making it challenging and influencing the traders to keep their prices low or fluctuate at present. As per the observations of Chem Analyst, the prices of Caprolactam are expected to remain stable and further increase in the coming weeks in the South Korean market because of increasing Crude Oil prices.