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    Home > Why Does the CPL Market Go Up Continuously?

    Why Does the CPL Market Go Up Continuously?

    Echemi 2017-07-26

    Introduction: The Chinese caprolactam (CPL) market continued increasing recently. The dealing price has reached RMB 15,000/mt. The CPL market has performed strongly since mid-July.

    In H1 May, the CPL market price went down to RMB 10,800/mt. Then the CPL units went maintenance in turns, and the supply became tight, which supported the market. Furthermore, the environmental protection pressure and hot weather weighed on the overall operating rate. Hence, the supply of CPL became tighter. Will the CPL market enter the booming trend?

    Echemi thinks that the CPL market will not jump. There are three reasons:

    1.No Support from the Macro Environment.

    The CPL market jumped last year as the overall commodity market showed an uptrend. But the CPL market increased recently as the overall tight was slightly tight. The support was not strong and will not last for long.

    2.The Demand for CPL Didn’t See Actual Increase.

    In 2016, the demand for CPL recovered after the G20 Summit. Moreover, downstream polyester chip traders stocked up, which supported the CPL market. This year, the demand for CPL was still flat.

    3.The Supply Will Be Sufficient As the Operating Rate Moves Up

    In 2016, the CPL capacity was restricted. Though the operating rate reached 90%, the supply could not meet the downstream demand. Recently, the tight supply was caused by the environmental protection inspection and some units’ operation problems. If the units restart and the newly-built capacity is put into operation, the supply of CPL will increase. At that time, the CPL market will go down.

    On the whole, there is no possibility for the CPL market to jump. Moreover, benzene prices are at low levels, the profits of CPL producers are considerable.

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