Asian caprolactam prices fell $10/mt week-on-week on a CFR Far East Asia basis to close Thursday at a 29-month low of $2,270/mt.
The last time prices reached such low levels was on December 24, 2009, when caprolactam was assessed at $2,225/mt CFR Far East Asia.
Several market sources said the low level of buying interest on dismal market sentiment reminded them of late 2008 as the financial crisis bit.
"Things seems more severe than 2008," an Indian trader said. "The only difference was that prices were free-falling back then, but now prices are slipping at a slower pace."
Buyers of caprolactam were heard to be purchasing only in small amounts that match the size of downstream product orders received.
Market sources said they anticipated producers will start cutting operating rates in order to reduce production losses.
Japan's Sumitomo Chemical reduced the operating rate of its 180,000 mt/year caprolactam plant at Niihama, Ehime prefecture, from 100% to 90% on June 8 due to declining demand, a company source said Wednesday.
Asian producers typically require caprolactam prices to be at a $1,300/mt premium over feedstock benzene prices. Caprolactam producers started to face losses on June 7, when benzene was assessed at $1,014.50/mt FOB Korea, putting the breakeven for caprolactam production at $2,314.50/mt. Asian caprolactam was then assessed at $2,280/mt CFR Far East Asia , implying that producers were making a loss of $34.50/mt.
