Cost pressure combined with weak demand leads to a decline in operating rates for merchant cyclohexanone production

Lead-in: Recently, domestic spot prices for cyclohexanone have fluctuated downward. Upstream raw material pure benzene prices first declined and then rebounded, resulting in unstable cost support. Meanwhile, downstream caprolactam overall operating rates remained low, and chemical fiber demand was sluggish. With bullish and bearish factors intertwining, market prices trended weakly. As of September 24, the reference price for cyclohexanone in East China was 10,500–10,600 RMB/ton.

Weak Demand Puts Downward Pressure on Cyclohexanone Prices

Most products in the industrial chain closed lower on a weekly basis. Raw material pure benzene oscillated at high levels, initially declining before rebounding. However, this rebound was primarily driven by short-covering during contract delivery phases, while end-user rigid demand did not follow suit synchronously. Consequently, the weekly average price still edged down to 9,764.0 RMB/ton in East China spot markets, a week-on-week decrease of 0.56%. Affected by cost transmission, cyclohexanone weakened in tandem, with the East China spot average price falling 1.41% week-on-week to 10,525.0 RMB/ton. Downstream caprolactam and polyamide 6 chips followed suit, with standard spinning PA6 chips recording the largest decline at 2.01%. Although pure benzene inventories in East China were low and spot supply tight, insufficient rigid demand from downstream chemical fibers constrained upward price repair across the industrial chain.

High Raw Material Costs Pressure Margins; Profitability Diverges in Cyclohexanone Industry

Currently, integrated capacity for domestic cyclohexanone-caprolactam production continues to expand and mature. As a key chemical intermediate, cyclohexanone's share of merchant sales has gradually decreased, leading to continuously lower utilization rates for standalone merchant production units. Recently, the price spread between pure benzene and cyclohexanone narrowed to within 1,000 RMB/ton, exacerbating industry losses. As of September 24, theoretical losses for cyclohexanone produced via the hydration process stood at 1,200 RMB/ton, while losses for those using the oxidation process reached 2,200 RMB/ton.

Dual Pressure from Costs and Demand Drives Down Utilization Rates for Merchant Capacity

From the perspective of merchant supply enterprises, influenced by multiple factors including weak demand, high costs, and inventory pressure, domestic cyclohexanone industry utilization rates have continued to decline. Some plants remain shut down for extended periods, such as Weiming Petrochemical and Jiangsu Haili. Inner Mongolia Qinghua shut down in mid-September, and Henan Shouheng also has a planned shutdown, relying mainly on existing inventory for external supply in the short term. On the demand side, most domestic caprolactam producers have built their own ancillary cyclohexanone capacities and only procure small amounts externally on an intermittent basis. Overall industry operating loads were low this week, with insufficient orders in the terminal chemical fiber sector leading to a clear contraction in rigid procurement volumes. Although circulating merchant spot supplies are not abundant, further reductions in output are expected.

Weak Supply-Demand Balance Persists; Short-Term Prices Likely to Oscillate Within Range Following Pure Benzene

Looking ahead, cyclohexanone spot prices are likely to continue oscillating, tracking the movement of pure benzene. While reduced operating rates for merchant units may shrink external supply sources, producers face pressure to sell high-priced inventory. Simultaneously, the proportion of integrated cyclohexanone-caprolactam capacity is high domestically, ensuring ample raw material self-sufficiency for most caprolactam producers. Combined with weak orders in the chemical fiber industry and solvent users maintaining demand-based purchasing, overall demand remains lackluster. Regarding costs, pure benzene supply and demand are both expected to grow next period. Inventory drawdowns will provide some fundamental resilience, but expectations of easing geopolitical tensions may suppress crude oil-related costs. Amidst this tug-of-war, pure benzene is likely to maintain high-level oscillations. In summary, cost pressures for cyclohexanone persist, keeping the market in a weak equilibrium, with short-term prices expected to trade within a range alongside raw material pure benzene.