Caprolactam Anti-Dumping: Upstream Downstream Thinner

Since June 2003 to June 2008, anti-dumping duties on caprolactam (CPL) imported from Japan, Belgium, the Netherlands, Germany, and Russia have been levied for less than three years. On January 24, 2011, the Ministry of Commerce issued an announcement and preliminary ruling. The imported caprolactam originating in the European Union and the United States was dumped, and the investigation agency decided to implement temporary anti-dumping measures in the form of a margin of 4.3% to 25.5%.

Although the Ministry of Commerce has not yet carried out the final ruling, this time the "two contradictions" of caprolactam caused great controversy in the industry. The downstream industry of caprolactam believes that if anti-dumping is successful again, the downstream industry will not only have high costs, but will be hard-pressed or have a “disastrous” disaster. Nearly 400,000 employees may also be laid off.

The upper reaches of the basin are full of difficulties

Caprolactam is an important organic chemical raw material, mainly used for the polymerization to produce polyamide chips. Nylon production enterprises are its main downstream customers. At present, there are only four domestic caprolactam producers, namely Nanjing DSM Dongfang Chemical Co., Ltd. (a joint venture between Sinopec Nanjing Chemical Industry Company and DSM Group Fiber Intermediates) and Sinopec Baling Petrochemical Co., Ltd. Sinopec Shijiazhuang Chemical Fiber Co., Ltd. and Juhua Group. Not only are all state-owned enterprises, but Sinopec is in a dominant position. Once the anti-dumping measures are implemented, domestic caprolactam prices will be completely determined by the four companies.

According to the monitoring data of the China Chemical Fiber Economic Information Network, the spot price of imported caprolactam was 22,400 yuan per ton on the same day (22 April 2010), and the transaction price of Eastern Europe was 2,665 US dollars per ton. After the initial cut on January 24 this year, the price of caprolactam soared. On March 8 this year, the spot price and the price in Eastern Europe have risen to 28,700 yuan/ton and 3,560 US dollars/ton, respectively, an increase of 28.1% and 33.6%. . In the domestic market, Sinopec, which controls the absolute price of caprolactam, had an unveiling price of caprolactam of only RMB 20,950/ton in March 2010, and rose to RMB 28,100/ton in February 2011, an increase of 34.1%. During this period, the price of raw materials for caprolactam increased by only US$42/ton.

China Chemical Fiber Economic Information Network monitoring data also showed that since the beginning of this year, the gross profit per ton of caprolactam was between 12,000 and 13,000 yuan, and the net profit was between 8,000 and 10,000 yuan.

But its downstream began to complain.

According to some nylon enterprises, the "two contradictions" of caprolactam had already severely broken the supply and demand pattern of the nylon industry. Prices have skyrocketed and costs have soared. The survival of downstream enterprises is in jeopardy. “If we can still wear a piece of clothing before, this year, even the vests are almost gone. The price of caprolactam has been rising all the way, and it is very unstable. As a result, we have not dared to offer products to downstream customers. There is basically no profit in the industry. Words, "life insurance" is the first one." Liu Yaoxiang, vice chairman of Jiangsu Junma Chemical Fiber Co., Ltd. said.

According to the person in charge of the Nylon Professional Committee of the China Chemical Fibre Industry Association, the "two contradictions" made the contradiction between the original supply of caprolactam much tighter. Due to the lack of raw materials, new polyamide polymerization units that have been completed by enterprises such as Zhejiang Meibang and Shandong Xiangyu have been forced to postpone production. Large-scale projects under construction such as Fujian Jinjiang Science and Technology and Zhejiang Yiwu Huading have had to slow down. The extremely high raw material costs have offset all the international competitiveness that the domestic polyamide polymerization industry has achieved through technological innovation. It is expected that the annual operating rate of nylon enterprises will fall below 65% in 2011, which may affect the employment stability of 300,000 to 400,000 people.

Protection does not solve production quality problems

According to industry experts, domestic caprolactam products have long-standing problems of insufficient production and unsatisfactory quality. Without allowing foreign products to enter, two major problems are aggravated, resulting in a sharper supply-demand conflict between upstream and downstream industries.

Insufficient production. It is understood that China's caprolactam industry started in the 1960s, and before the 1980s, it was basically a device with small scale and backward technology. From the 1980s to the present, there have been only four caprolactam producers in China. In 2010, the domestic caprolactam production capacity was approximately 585,000 tons, and the actual production was close to 500,000 tons. In the past 10 years, the apparent domestic consumption of caprolactam (imports + national production) has increased from 139,300 tons in 1994 to 221,100 tons in 1997, and has increased to 489,400 tons in 2002, and continued to increase to 93.19 in 2009. Ten thousand tons. The average annual growth rate has been around 17%. According to the data, in 1995, the self-sufficiency rate of domestic caprolactam was 34.4%. After 2003, the self-sufficiency rate of caprolactam in China was not only not increased, but was even lower. It was 27.85% in 2003, 22.85% in 2005, and only 21% in 2009, which is the lowest point in history.

According to the person in charge of the Nylon Professional Committee of the China Chemical Fiber Industry Association, in order to meet domestic demand for caprolactam products, domestic imports have been required since the 1980s. According to demand, the import dependency of caprolactam is maintained at about 60% for a long time, and the market can be stabilized. According to authoritative data, in 2002 before the “reverse”, the domestic import of caprolactam was 62.27%. By June 2008, when the "one counter" expired, the domestic dependence on imported caprolactam was 64.52%, which was higher than that before "inversion". Industry insiders believe that this fully shows that although the government has helped the caprolactam industry block the competition of a foreign product and has obtained opportunities for domestic caprolactam enterprises, domestic caprolactam companies have not taken advantage of this rare opportunity to expand production capacity, and production has not kept pace with downstream industries. The speed of development. Finally, downstream companies still had to import caprolactam, but the price also rose.

The quality is not excellent. Jiangsu Junma Chemical Fiber Co., Ltd., Jiangsu Haiyang Chemical Fibre Co., Ltd., Zhejiang Jinhua Yalun Chemical Fibre Co., Ltd. and some other nylon enterprises stated that there are certain gaps in the product quality of several domestic caprolactam producers compared with imported products from Europe and the United States. , mainly in terms of excellent product rate, quality stability, impurity content, etc. can not fully meet the production needs of high-end civilian silk products. "I would rather buy imported goods at high prices and would not use domestic products with unstable quality," said the companies.

Since domestic caprolactam has not been able to meet the needs of the downstream market, why do we have to anti-dumping foreign products?

Obviously, due to the influx of foreign products, four domestic companies have been greatly threatened by competition. Therefore, some companies use their influence on the government to force anti-dumping. Once anti-dumping, the domestic price of caprolactam is basically the final say for Sinopec, and the upstream supplier objectively owns the monopoly right. This will inevitably form the situation of the upstream and downstream "Icefire two heavy heavens."

Many downstream business leaders pointed out that 8 years ago, the government carried out the first anti-dumping of caprolactam products. Although it was an injury to us, if domestic caprolactam enterprises could use this opportunity to catch up, they would increase their scale and increase their core competitiveness. Kung fu, we will recognize it. But so many years have passed, unfortunately, domestic caprolactam companies have not reached a level that basically meets domestic demand in terms of output, and there has been no significant technological progress. The reason is that anti-dumping has enabled these companies to make huge profits overnight. Since they can make profits without competition, who is willing to spend more time to improve themselves? Anyway, you can still demand that the government come forward to anti-dumping. Sure enough, now the "second anti-" started again. The same trajectory, once again copied, "two anti-" benefit is still a few companies, downstream companies must therefore suffer from the price increase. How can this be conducive to the normal development of the downstream and how can it be conducive to the rapid progress of the upper reaches?

Should break the monopoly of upstream and downstream common development

CCIN reporters also heard such an opinion in the interview that the "two contradictions" of caprolactam will, to a certain extent, limit the influx of foreign caprolactam products at low prices, which will accelerate the export of China's caprolactam technology to Europe and the United States. However, the CCIN reporter also listened to the diametrically opposed view: "One counter" ended, but the results of a large number of foreign output technologies did not appear. This lesson tells us that foreign companies do not follow our roadmap and we cannot wish to do it.

An industry executive who asked not to be named told the CCIN reporter: “Of the caprolactam project, one is big investment and the second is technical difficulty. Technology is the core issue, followed by the source of funding. If you say that foreign companies are in the last century, If it is possible to transfer technology in the 1980s and 1990s, these foreign companies will never transfer core technologies to us today. China can only rely on its own innovation, otherwise it is impossible to break through.”

Some companies have stated that the palm of the hand is meat. Why did you only think of protecting the upstream? If the government really wants to protect it, it will simply be protected along with the downstream. If this is not possible, it should be liberalized both upstream and downstream so that the market can solve the problem. Since upstream companies are so worried about the entry of foreign products, then the field of caprolactam should be expanded to allow private enterprises that are not afraid of competition to come in.

“We also thought about producing caprolactam ourselves, but the difficulties are really great. In particular, the upstream raw materials of caprolactam are controlled by Sinopec. They will not let go, and nobody can do it,” said a person in charge of a chemical fiber company in Jiangsu.

It is understood that in recent years, there have been reports of new caprolactam devices in the country. For example, Zhejiang Hengyi newly builds 200,000 tons of caprolactam plant; Jiangsu Junma Chemical Fiber Group Co., Ltd. builds a new 200,000 tons/year of caprolactam factory; Zhejiang Sanding Holding Group intends to intervene in caprolactam product industry and prepares to invest in the construction of caprolactam with an annual output of 500,000 tons. Project; Shandong Bohui 100,000 tons caprolactam project and so on. However, after a period of time, it is often not enough. The first reason is that the second technology is the raw material. As a result, these new projects can only be approved and have no actual output. Some companies had wanted to join forces with Sinopec to produce technology from Sinopec to jointly expand the domestic caprolactam scale. However, according to informed sources, Sinopec is still saying: intends to control.

"The purpose of national anti-dumping is to protect domestic industries. Are we downstream private capitals not domestic industries?" Many chemical fiber companies have issued such questions.

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