Introduction: Domestic caprolactam prices have fallen sharply since March 6, from 19,600 yuan/ton, falling below the cost line without any buffer, until the price reached the lowest point of 11,700 yuan/ton. Manufacturers were unable to ship goods and inventories increased sharply. The sky for caprolactam collapsed overnight. Various companies began to come up with unique strategies, especially quotations for limited production. Isn’t this a little late? Is it possible for the market to rebound?
As shown in the figure, the domestic caprolactam market price has been on a “roller coaster”. At its peak on March 6, there was a cliff-like downward trend, and the decline caused by inertia was out of control. Several reasons led to the sharp decline in the market: 1. The price of pure benzene fell sharply, and the cost support of caprolactam was insufficient. 2. In order to obtain more benefits, the domestic caprolactam operating rate once reached 80%, and the spot market supply is abundant. 3. Downstream aggregation is affected by the weakening of downstream demand, and its own inventory pressure is greater. The bearish sentiment on the market outlook is relatively high. Many manufacturers have stopped production and reduced their load to avoid risks, and the operating load has remained at around 50%. 4. Enterprises have huge profits, and large profit concessions stimulate downstream buying interest. They don’t know that downstream companies no longer have much confidence in this market, and the more they fall, the less interested they are. Summary: Costs are unsupported, supply is high, demand is low, and corporate mentality (profits are huge and don’t want to reduce production), the market price will be damned if it doesn’t fall.
The domestic pure benzene market has rebounded slowly from low levels, and the cost support of caprolactam is still insufficient. Although the start-up of downstream aggregation enterprises has increased slightly, it still remains at a low level of 5.50%, and demand is unlikely to increase in the short term. A month of insisting on lowering prices without reducing production has resulted in negative profits. At this time, the quotation of limited production is undoubtedly the best choice (the company limited production only when the profits were negative. Is it a little late? Why can’t it make profits again? When production was limited, I really don’t understand the mentality of the company). Nearly nine months have passed since the last large-scale overhaul of the caprolactam market. Manufacturers have gradually tended to carry out overhauls and rectifications at this time point. The start-up once dropped to about 50%. In the short term, it will remain at a low level and there will be no significant improvement. expected. So far, the market price has gradually returned to calm after going through the “ice and fire”.
Summary: Domestic pure benzene prices have rebounded from low levels, but it is not enough to drive up the price of caprolactam. Downstream polymerization is still mainly based on consumption and purchase on demand. With the decline in caprolactam production, the overall market supply and demand has gradually returned to a relative balance. Is it possible for the market to rebound? Necessary conditions: The price of pure benzene rises, business operations start at a low and stable level, and downstream demand increases. These three are indispensable, and the results will be released in May.
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