Caprolactam prices exhibited mixed trends across key markets during early December 2024, reflecting divergent regional dynamics. While prices in China rose marginally supported by a recovery in the automotive sector and stable supply, Germany experienced a sharp decline driven by weak demand from automotive and textile industries. Ample inventories and cautious procurement dominated both regions, with year-end destocking efforts further shaping market activity.

In China, Caprolactam prices rose marginally by 0.3% due to a steady recovery in the domestic automotive market. November passenger car registrations rose significantly, with a month-on-month and year-on-year increase, signalling improving consumer sentiment. However, this growth provided limited support for Caprolactam, as ample inventories and cautious restocking behaviour among manufacturers kept demand subdued. The downstream textile industry, a critical driver of Caprolactam consumption, faced persistent challenges. Delayed seasonal purchases, poor order follow-up, and accumulated textile inventories pressured producers to offer discounts to clear stock. Buyers, in turn, limited purchases to essential needs, intensifying the decline. Supply levels remained robust, bolstered by stable production rates and recent logistical improvements, including addition of vessels in late November. However, the increase in intra-Asian freight rates suggests potential cost pressures in the near future, which may affect market dynamics moving forward.

In Germany, Caprolactam prices dropped sharply by 4.5% due to sluggish demand from downstream sectors, particularly automotive and textile industries. The automotive sector, despite record production of electric vehicles, continued to grapple with weak domestic demand. The cessation of government subsidies in 2023 has led to sharp declines in EV sales, while broader vehicle sales have failed to recover meaningfully. Further, the weakness in the manufacturing sector, reflected in declining new orders and rising production cuts, further undermined Caprolactam demand. The textile industry added to the bearish sentiment as pre-holiday retail sales slowed amid cautious consumer spending. Retailers faced declining foot traffic despite easing inflation, with many consumers saving amid economic uncertainties. Inventory build-ups and discounted offers from producers kept purchasing activity subdued, amplifying the downward trend in Caprolactam prices.

Looking ahead, Caprolactam prices in China are anticipated to stabilize as market participants expect improved demand from the textile sector during the winter season, driven by predictions of colder weather. However, cost pressures from rising intra-Asian freight rates could influence market dynamics. In Germany, the outlook remains subdued, with weak downstream demand and regulatory cost increases, including the EU’s expanded Emissions Trading System and stricter fuel regulations, likely to weigh on sentiment. Year-end inventory management in both regions will continue to suppress near-term price momentum for Caprolactam, although a rebound in early 2025 could emerge if downstream sectors recover.