Introduction: The caprolactam market surged in March, driven by a sharp rise in upstream raw material costs and tight supply. In April, cost-side support remains, and the supply-demand balance continues to be tight. However, the transmission of downstream demand is still under observation, and the market may enter a phase of high-level consolidation.

Cost Side: Sharp Increase in Upstream Raw Materials, Rising Costs

| Figure 1: 2025-2026 Pure Benzene Market Price Trend (RMB/ton) | Figure 2: 2025-2026 Caprolactam Market Price Trend (RMB/ton) |
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| Data Source: chempricehub | Data Source: chempricehub |

The prices of upstream raw materials for caprolactam, such as pure benzene and sulfur, rose sharply in March due to Middle East tensions and reduced supply. This directly increased caprolactam production costs, becoming the core driver of the price increase. For pure benzene, Sinopec's average March listing price was 7,871 RMB/ton, up 1,747 RMB/ton from February's 6,124 RMB/ton. The spot price in East China averaged 8,020 RMB/ton, a month-on-month increase of 31.95%. For sulfur, the price at Zhenjiang Port rose to 5,850 RMB/ton by the end of March, up 1,750 RMB/ton for the month, a 43.68% increase. Against this backdrop of rising raw material costs, caprolactam producers intended to widen the benzene-caprolactam price spread, showing strong price support intentions, which further contributed to firm and rising product prices.

Supply-Demand Structure: Both Supply and Demand Grew, Supply Remains Tight

Caprolactam Monthly Supply-Demand Balance Sheet (Unit: 10k tons, RMB/ton)

| Indicator | March | February | Change (Value) | Change (%) |
| :--- | :--- | :--- | :--- | :--- |
| -- Production | 58.29 | 50.58 | +7.71 | +15.24% |
| -- Imports | 1 | 1 | 0 | 0.00% |
| Total Supply | 59.29 | 51.58 | +7.71 | +14.95% |
| -- Downstream Consumption | 59.25 | 52.34 | +6.91 | +13.20% |
| -- Exports | 1.1 | 1.26 | -0.16 | -12.70% |
| Total Demand | 60.35 | 53.60 | +6.75 | +12.59% |
| Supply-Demand Gap | -1.06 | -2.02 | +0.96 | -47.52% |
| Average Price (Period) | 12,198 | 9,892.19 | +2,305.81 | +23.31% |

Both supply and demand for caprolactam achieved month-on-month growth in March. The operating rate of caprolactam plants increased from around 70% in February to around 80% in March. Domestic production reached 582.9k tons, up 15.24% month-on-month; capacity utilization was 77.10%, up 2.8 percentage points month-on-month, indicating increased supply. Meanwhile, downstream demand gradually recovered, driving linked growth in consumption. Downstream consumption of caprolactam in March was 592.5k tons, up 13.20% month-on-month. The supply-demand gap was -10.6k tons, still indicating a deficit where supply falls short of demand. The core structure of tight supply remains unchanged.

Rising Prices of Caprolactam and Ammonium Sulfate Improve Profitability

In March, the production gross margin for caprolactam was -389 RMB/ton, an increase of 290 RMB/ton month-on-month; the plant gross margin (including by-product revenue) was 1,791 RMB/ton, up 786 RMB/ton month-on-month. The increase in caprolactam prices, coupled with rising prices of the by-product ammonium sulfate, led to improved profitability for caprolactam producers.

| Figure 4: 2025-2026 Caprolactam & Benzene-Caprolactam Spread Trend (RMB/ton) | Figure 5: 2025-2026 Caprolactam Theoretical Profit Trend (RMB/ton) |
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| Data Source: chempricehub | Data Source: chempricehub |

(Note: Production cost is calculated at 4,000 RMB/ton. Production gross margin refers to the profit from caprolactam alone, excluding ammonium sulfate revenue. Plant gross margin includes ammonium sulfate revenue.)

Outlook: Cost and Supply Support Persist, Downstream Demand Transmission Under Watch; Market May Enter High-Level Consolidation Phase

Cost: Looking ahead, reduced supply and port destocking of pure benzene provide fundamental support for prices, potentially continuing to push up caprolactam production costs. The evolution of the Middle East situation remains a key factor. If geopolitical conflicts persist, raw material prices may continue to rise, further strengthening cost support. If tensions ease, raw material prices may experience a slight correction, marginally alleviating cost pressure.

Supply: In April, Hunan Petrochemical's 600k ton/year unit plans a one-week maintenance starting early April, and Cangzhou Xuyang Phase II plans a one-month shutdown for maintenance around mid-April. Caprolactam production in April is estimated at 565k tons, down 3.07% month-on-month. The supply structure is expected to remain tight.

Demand: The core focus is the transmission of high raw material costs downstream. If upstream cost increases cannot be smoothly passed through to end-users, downstream PA6 and nylon enterprises may face profit pressure, potentially leading them to reduce operating rates, which would further contract caprolactam demand. If transmission is smooth, demand-side support will also exist.

Summary: In the near term, cost and supply-side support for caprolactam persist. However, downstream transmission remains uncertain. Currently, high-priced PA6 chip transactions are weak, inventory at polymerization plants is increasing, and end-user follow-up may slow. Consequently, the caprolactam market may enter a phase of high-level consolidation.