Last Updated : 16 January 2013 at 22:25 IST
Asian Caprolactam production rises on industrial demand
Global demand for caprolactam has been steadily increasing over the last decade, from 3,503,390 tons in 2000 to 4,164,201 tons in 2011, and this figure is expected to hit 5,992,732 tons by 2020.
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NEW YORK (Commodity Online): Caprolactam is a chemical primarily used in the production of nylon fibers and resins, and production levels are rising in Asia as industrial demand builds, states a new report by industry experts GBI Research.
The chemical is used for the manufacture of textiles, carpets, industrial yarns and films, while nylon resins are also used in engineering plastics, and their resistance to oils and greases has led to their utility in engine covers, gears and bearings.
Global demand for caprolactam has been steadily increasing over the last decade, from 3,503,390 tons in 2000 to 4,164,201 tons in 2011, and this figure is expected to hit 5,992,732 tons by 2020. As demand in developed economies has matured, growth in Asia-Pacific economies has become the main driver for global caprolactam demand, and is predicted to account for 69.5% of total global demand in 2020.
China has emerged as a global caprolactam manufacturing hub due to low feedstock costs and a regional huge demand for nylon, and accounted for around 46% of Asia-Pacific’s total demand volumes during 2011. China has recently been witnessing developments in various manufacturing sectors which demand caprolactam, and the country’s low operating costs encourage local caprolactam production to meet this need. As a result, there have been huge caprolactam capacity additions in the country.
India, Taiwan and Thailand all follow as smaller caprolactam producers, with announced caprolactam capacity additions being made throughout Asia-Pacific by major chemical players including Sinopec. Total capacity expansions are predicted to reach 200,000 tons per year by 2015, with new announced nylon plants in Southeast Asia being expected to take up a portion of the increased output from China.
However, volatility in crude oil prices threatens the profitability of caprolactam producers, as the chemical’s feedstock is derived from crude oil. Within the highly competitive global environment, any price volatility in crude oil cannot be directly translated into end-use prices, and this potentially reduces the profitability of manufacturers.
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