After many months of steep rise, caprolactum, an essential industrial chemical and primary raw material for nylon, is likely to witness a fall in prices over the next few months.
Indian caprolactam prices rose from Rs 89,500 per tonne in May 2009 to Rs 1,35,000 last month, according to Capitalonline Services.
This situation has turned. Industry sources attribute this to various reasons. Primarily, demand has fallen compared to supply, as users are deferring the lifting of the material in the domestic market. Globally, caprolactum has already started witnessing a softening trend along with its primary raw material, benzene, whose prices have started to mellow as well, say sources .
Officials at Fertiliser and Chemicals Travancore Ltd (FACT), one of the two major manufacturers and marketers of caprolactum in India, said global prices had started coming down from the high of $2,720 per tonne a month earlier to $ 2,600 per tonne at present. “The primary reason is slowdown in consumption in China, one of the major export markets for Indian caprolactum manufacturers. There has been a slowdown in China’s textile and filament yarn market, where units are not expanding plant capacity because industries there are not being able to pass on the rapid price rise in the imported raw material to end-users and thus are unable to recover the margins,” they said.
They added that slowdown in caprolactum exports had increased domestic stocks, which may lead to a cut in prices. In fact, market sources feel there may be a further decline of Rs 4-6 a kg from Rs 139 a kg.
Gujarat State Fertiliser Corporation (GSFC, the other major manufacturer) officials attributed the possibility of a decline in prices of caprolactum to overall slowdown in demand in the domestic market, with supply remaining the same.
Nylon makers shift
Local manufacturers of nylon chips said these developments were a sequel to the rapid rise in caprolactum prices over the last few months. It had led most manufacturers of nylon to shift to other polymers like polypropylene.
“This may be another reason why the domestic industry is facing a slowdown in demand for caprolactum, since most units are running under capacity. Moreover, inability to directly and proportionately pass on the impact of the price rise in the raw material over the past few months to end users in India has also squeezed the margins of manufacturers,” they added.
However, they clarified that this may not result in a decline in prices of end products, since the manufacturers had not hiked prices of finished goods in line with increasing raw material procurement prices.
Caprolactam is also used in brush bristles, textile stiffeners, film coatings, synthetic leather, plastics and plasticizers. GSFC’s installed capacity is 70,000 tonnes a year, whereas FACT has an installed annual capacity of 50,000 tonnes.
