German Caprolactam Prices Project Bearish Movement for the End of Q4 2023

In the German market, the price of Caprolactam experienced a narrow range of decline over the last two weeks in December 2023. Demand conditions for Caprolactam in the construction and automotive sectors remained notably unfavourable, evident from a sustained and significant downturn in new orders from November extending into December. Manufacturers continued to grapple with pricing challenges due to the reduced demand for inputs in these sectors.

Benzene, the primary raw material, sustained its subdued trend with a 2.3% decline in the past week. This hints at a reduction in the production expenses of Caprolactam, aiding Germany's domestic market. However, challenges persist due to diminished international demand for Caprolactam, posing a significant setback for the sectors involved. Additionally, companies are actively reducing inventories of finished goods, primarily as a cost-cutting measure in response to sluggish sales. According to ChemAnalyst, the cost of Caprolactam decreased by 1% on a week-over-week basis, considering a FOB Hamburg perspective, in the past week.

The downstream industries, specifically mentioning Polyamide 6, appeared to be cautious in their procurement approach, only making purchases on a need basis. This lack of proactive buying from downstream industries indicates a more conservative and reserved stance, possibly influenced by market conditions or strategic considerations. Additionally, the improvement in vendor performance during this period was improved for the past two weeks. The Manufacturing PMI for the end of fourth quarter of 2023 showed a marginal increase compared to the previous month, even as demand continued to be impacted by customer reluctance, geopolitical uncertainty, and higher interest rates. Notably, new orders for Caprolactam experienced a lesser decline, and the rate of depletion of work in hand was at its weakest during this period. As a consequence of the weakened demand environment, companies reduced employment as they scaled back the production capacity of their products. The above-mentioned factors indicating the consumption of the Caprolactam in German market remained muted during this period.

In anticipation of the quarter's conclusion, industry observers foresee a bearish trend for Caprolactam, influenced by the sustained decline in the performance of the construction and automotive sectors within the German market. The early part of the upcoming year holds the potential for stability, accompanied by a modest uptick in demand for Caprolactam. Suppliers are likely to seek enhance profit margins during this period. However, it is important to exercise caution as the overall demand is expected to be tepid, thereby constraining the prospects for a robust recovery.