Caprolactum and Cyclohexane demand to gain momentum in the near future – 8 Apr 2014

The demand for Cyclohexane is moderate across major trading hubs in India and Gujarat State Fertilizers & Chemicals Limited (GSFC), which has a major market share for the chemical,  recently conducted a downward price revision. The website notes various reasons to be the contributing factor for this price decline in this news story. At the same time, it is noted that GSFC rolled over the list price for Cyclohexanone. The website notes, on account of interaction with various market participants, that this price revision could be due to weaker demand trend than its feedstock .

Domestically, GSFC has significant market share for Cyclohexane and Cyclohexanone. On 1st April, 2014, the company rolled over the Ex-Factory price of Cyclohexanone to Rs. 132 per kg while it decreased the price for Cyclohexane by Rs. 6 per kg to Rs. 97 per kg, all prices are exclusive of all taxes.

"RIL also manufactures Cyclohexane, however there are limited RIL stocks in the market. Most traders feel that GSFC reduced its market prices in order to remain competitive against RIL products, whose basic price is around Rs.100-102 (exclusive of all taxes)", a trader told the website.

Alternatively, the benchmark price of Benzene in South Korea has been declining since the beginning of the year, however the prices have traversed upwards since mid March, according to data gathered by the website. In the Indian market context, the price of Benzene  have been on the lower trading range since February and at present the price have stabilized at these lower levels. In line with this, its speculated that weak market dynamics for Benzene could be a contributing factor for lowering Cyclohexane prices, as its the feedstock.

Indianpetrochem spoke to various market participants and understood that the demand for the Cyclohexane is moderate in the country. Apart from producing chemical intermediary like Cyclohexanne, the chemical also finds application as a solvent in paint and resin industry. Most traders are of the view that the demand outlook should be positive in the near term post the election outcome.

On the other hand, while GSFC rolled over the price for Cyclohexanone, its important to add that additional discount offered over and above the Ex-Factory price of Rs. 3 per kg has been ceased since the beginning of this month.

Most industry sources are of the view that GSFC rolled over the price in order to maintain its competitiveness against imports, which was selling at Rs. 129 per kg (exclusive of all taxes) in the last week of March.

However, recently the bulk prices of imports have dropped to Rs. 125 per kg, exclusive of all taxes. This leaves room for most trader to speculate that GSFC would most likely do a downward price revision for the chemical in order to be competitive against imports.

Also, the chemical finds application as a solvent and thinners for lacquers, especially vinyl chloride polymer and copolymer resins including PVC. Most traders in the market have an expectation that the demand from these end users should increase in the coming months due to strong cyclical demand for PVC in summers.

Overall, the market has an expectation that the demand for Cyclohexane and Caprolactam should pick up in the short to medium term, however the price outlook for these chemicals will vary on factors such as booking price of imports and basic price of other domestic manufacturers.