By Yan Feng

Production status

The industrial production of caprolactam in China began in the late 1950s. In recent years, with the research, development and optimization of China's caprolactam production technology, national economic construction and the growing demand, many companies have expanded their production units or built new ones. As of the end of December 2022, China's caprolactam production capacity reached 5.95 million t/a. Figure 1 shows the changes of caprolactam production capacity in China from 2016 to 2022. Table 1 provides a list of manufacturers in 2022.

Figure 1 Changes of caprolactam production capacity in China from 2016 to 2022

After years of development, the caprolactam industry in China exhibits the following characteristics:

(1) Production capacity experienced a steady growth, increasing from 2.53 million t/a in 2016 to 5.95 million t/a in 2022. Among these, there was a newly-added production capacity of 1.180 million t/a in 2021, a year-on-year increase of approximately 26.40%.

(2) The production capacity was mainly concentrated in East China, North China and South China. In 2022, the production capacity in East China including Shandong Province, Zhejiang Province and Jiangsu Province amounted to 2.55 million t/a, accounting for approximately 42.86% of the total capacity. South China including Fujian Province had a production capacity of 1.230 million t/a, accounting for approximately 20.67% of the total. North China including Hebei Province, Shanxi Province, and Inner Mongolia Autonomous Region contributed 1.350 million t/a, accounting for approximately 22.69% of the total. Central China including Henan Province, Hunan Province, and Hubei Province had a production capacity of 820 000 t/a, accounting for approximately 13.78% of the total. Shandong Province was the largest caprolactam producing province, with a production capacity of 1.40 million t/a in 2022, accounting for approximately 23.53% of the total. The distribution of caprolactam production capacity in major provinces and cities in China in 2022 is shown in Figure 2.

Figure 2 The distribution of caprolactam production capacity in major provinces and cities in China in 2022

(3) Most production units are equipped with both upstream and downstream units. Companies such as Shandong Energy Group Yankuang Lunan Chemicals Co., Ltd., Inner Mongolia Qingfeng, Shandong Risun Group Co., Ltd., Shandong Haili Chemical Industry Co., Ltd., Shanxi Lanhua Sci-Tech Venture Co., Ltd., Hubei Sanning Chemical Co., Ltd., Luxi Chemical Group Co., Ltd., Hengyi Petrochemical Co., Ltd., Zhejiang Juhua Co., Ltd., Fujian Tianchen Yaolong New Material Co., Ltd., Fujian Shenyuan New Materials Co., Ltd. are equipped with upstream cyclohexanone units. On the other hand, companies like Shandong Risun Group Co., Ltd., Shandong Hualu-hengsheng Chemical Co., Ltd., Fujian Shenyuan New Materials Co., Ltd., Sinopec Baling Petrochemical Co., Ltd., Luxi Chemical Group Co., Ltd., China Pingmei Shenma Energy & Chemical Group Co., Ltd., and Yangquan Coal Industry Group Taiyuan Chemical New Material Co., Ltd. are equipped with downstream nylon 6 slice production units.

(4) Except for Sinopec Shijiazhuang Refinery & Chemical Co., Ltd., which has a set of toluene production units, other companies mainly adopt the ammonia oxime method and the HPO method. Nanjing Fibrant Dongfang Chemical Co., Ltd. and Fujian Shenyuan New Materials Co., Ltd. use the HPO method, accounting for approximately 16.81% of the total production capacity, while other companies use the domestically developed ammonia oximation method.

(5) In addition to large state-owned enterprises like Sinopec Group, investment entities also include joint ventures such as Nanjing Fibrant Dongfang Chemical Co., Ltd., private enterprises such as Shandong Haili Chemical Industry Co., Ltd. In terms of enterprise types, coal chemical companies such as Hubei Sanning Chemical Co., Ltd., chlor-alkali companies such as Shandong Haili Chemical Industry Co., Ltd., and chemical fiber companies such as Zhejiang Baling Hengyi Caprolactam Co., Ltd. have also engaged in the production and operation of caprolactam. Fujian Shenyuan New Materials Co., Ltd. was China's largest caprolactam manufacturer in 2022, with a production capacity of 600 000 t/a, accounting for approximately 10.08% of the total; followed by Cangzhou Xuyang Chemical Co., Ltd., with a production capacity of 450 000 t/a in 2022, accounting for approximately 7.56% of the total.

Import and export analysis

1. Import analysis

According to China Customs statistics, from 2018 to 2022, China's import volume of caprolactam showed a development trend of first increasing year by year, and then decreasing. The import and export data of China's caprolactam from 2018 to 2022 is shown in Table 2.

From 2018 to 2022, China's caprolactam was mainly imported from Russia and Belgium. The main import sources of China’s caprolactam from 2018 to 2022 are shown in Table 3.

From 2018 to 2021, the import trade mode of China's caprolactam was mainly the processing trade of imported material, and the import volume showed a development trend of first increasing year by year and then decreasing. Among them, the import volume in 2021 was 92 400 tons, accounting for approximately 87.33% of the total volume, a year-on-year decrease of approximately 43.52%. There were significant changes in the import trade mode in 2022. The processing trade of imported material fell to the second place, with an import volume of 38 400 tons, accounting for approximately 44.86% of the total volume, a year-on-year decrease of approximately 58.44%; the logistics goods import trade from Customs special supervision area became the largest trade mode, with an import volume of 45 400 tons, accounting for approximately 53.04% of the total volume, a year-on-year increase of approximately 275.21%.

2. Export analysis

From 2018 to 2022, China's export volume of caprolactam showed a consistent upward trend. Among them, the export volume in 2022 increased significantly to 47 809.06 tons, representing a remarkable year-on-year surge of approximately 1 223.93%. During the same period, China's export unit price of caprolactam showed a trend of first decreasing year by year, then increasing, and then decreasing again. Among them, the export unit price in 2022 was US$1 744.81/ton, a year-on-year decrease of approximately 16.30% (Table 2).

In 2022, domestic caprolactam was mainly exported to South Korea and Taiwan of China, with a total export volume of 32 416.85 tons, accounting for approximately 67.80% of the total export volume, marking a substantial year-on-year increase of approximately 941.51%. Among them, the export volume to South Korea was 17 437.00 tons, accounting for approximately 36.47% of the total export volume, a year-on-year increase of approximately 716.34%; the export volume to Taiwan of China was 14 979.85 tons, accounting for approximately 31.33% of the total export volume, a year-on-year increase of approximately 1 434.03%.

Consumption status and development prospects

In recent years, with the rapid development of nylon yarn, cord fabric, polyamide engineering plastics and other industries in China, the demand for caprolactam has continued to surge. In 2022, China's apparent consumption of caprolactam reached 4.2678 million tons, a year-on-year increase of approximately 4.81%. The average annual growth rate of apparent consumption from 2018 to 2022 was 7.09%. The self-sufficiency rate of corresponding products was 99.11% in 2022, a year-on-year increase of approximately 1.66%. The supply and demand of caprolactam in China from 2018 to 2022 are shown in Figure 3.

Figure 3 The supply and demand of caprolactam in China from 2018 to 2022

China’s caprolactam consumption structure had little change in recent years. Currently, civilian spinning accounts for about 50%, film and engineering plastics about 25%, nylon 6 cord fabric about 17%, and others about 8%.

In recent years, China's caprolactam downstream product PA6 slices have shown steady development. In 2022, the production capacity increased to 6.370 million t/a, and the apparent consumption increased accordingly to 4.067 million tons. In the next few years, China is expected to complete and commission multiple sets of PA chip production units, including Shandong Jushun Luhua New Material Co., Ltd. with a capacity of 180 000 t/a, Jiangsu Hongsheng Group 600 000 t/a, and Hubei Sanning Chemical Co., Ltd. 300 000 t/a, Fujian Zhongjin New Material Co., Ltd. 70 000 t/a, Shandong Hualu-Hengsheng Chemical Co., Ltd. 200 000 t/a, China Inner Mongolia Qinghua Group Tengger Fine Chemical Co., Ltd. 200 000 t/a, Henan Pingmei Shenma Nylon Technology Co., Ltd. 200 000 t/a and Hengyi Petrochemical Co., Ltd. 600 000 t/a, etc. As these new or expanded units are completed and put into operation, the demand for caprolactam will increase accordingly. It is expected that by 2026, China's demand for caprolactam will reach 5 million tons.

Market price

The market price of caprolactam in China is mainly influenced by factors such as raw material pure benzene, downstream demand for PA6 fiber or PA6 film and resin, as well as import prices. Entering 2022, the caprolactam market price remained relatively high, with an average price of RMB13 108 per ton, a year-on-year decrease of approximately 5.00%. The highest price was RMB14 600 per ton in June. It is expected that in the future, as domestic supply continues to increase, downstream demand, upstream raw material prices and import prices will continue to change, and the market price of caprolactam will also experience certain fluctuations. However, due to the strengthening market modulation effect, the market price will not have significant changes.

Development trends and suggestions

1. Development trend

(1) In the next few years, China will still have more newly-added or expanded caprolactam production units including Shandong Energy Group Yankuang Lunan Chemicals Co., Ltd., Sinopec Baling Petrochemical Co., Ltd., Guangxi Hengyi Petrochemical Co., Ltd., Fujian Yongrong Technology Co., Ltd., Fujian Shenyuan New Materials Co., Ltd., Anhui Zhongneng Chemicals Co., Ltd., Hubei Sanning Chemical Co., Ltd. and other companies. If these projects proceed as planned, China's caprolactam production capacity will exceed 7 million t/a in 2026, while consumption will be only around 5 million t/a at that time. As a result, the overcapacity in China's caprolactam market is expected to further intensify, leading to increased market competition.

(2) As investment entities diversify, the proportion of state-owned enterprises is gradually decreasing. Conversely, the proportion of private enterprises and joint ventures is increasing, becoming the main force in China's caprolactam supply. The tension between supply and demand in downstream production bases such as Fujian and Jiangsu will continue to ease.

(3) PA6 fiber and PA6 resin remain the main consumption fields of caprolactam in China. However, the growth rate of PA6 fiber's demand for caprolactam will slow down, while PA6 resin will become the main direction and driving force for future demand. In addition, caprolactam will also face the risk of being replaced by alternative products, leading to intensified competition. In the civil yarn field, competition mainly comes from polyester products; in the bias tire cord fabric field, it is mainly from radial tires and polyester cord fabric; in the carpet yarn field, competition mainly arises from polytrimethylene terephthalate (PTT).

(4) Although China's caprolactam production capacity will continue to grow in the future, the output of high-quality products may not fully meet the actual domestic production demand. As a result, a certain amount of imports will be necessary in the future, but the volume is expected to gradually decrease.

(5) With the continuous advancement of production technology and the improvement of quality, it is anticipated that China's caprolactam export volume will experience significant growth in the near future.

(6) With the continuous growth in production capacity, China's caprolactam industry has shifted from short supply to oversupply. In addition, the issue in product homogeneity is relatively serious, and most of them are lower-end products. Consequently, the industry is entering an era of low profit or micro profit, leading to intensified market competition. 

2. Development suggestions

As caprolactam in China becomes oversupplied, it is crucial for industry players to rationally expand capacity and make a reasonable layout to avoid disorderly competition in the future. Production enterprises that have been completed and put into production should increase technological transformation and increase the research, development and application of new energy-saving and emission-reducing technologies in the production process. In these ways, it will enable them to save energy, reduce costs, improve product performance, minimize environmental pollution, and achieve environmentally friendly and clean production, ultimately increasing their competitiveness. On the other hand, enterprises planning to build or expand should comprehensively assess their own strengths and weaknesses, analyze various factors and industry risks, and cautiously join industry competition. At the same time, enterprises should actively develop new production technologies to produce high-quality products, thereby reducing competition among homogeneous products and meeting domestic demand. Moreover, it is also essential to extend the industrial chain, integrate upstream and downstream development, and expand the application of enhanced caprolactam in high-end fields such as engineering plastics to effectively reduce the impact of substitutes. Furthermore, efforts should also be made to improve product quality, actively expand exports to address domestic overcapacity conflicts and ensure the healthy and steady development of the caprolactam industry.