Europe suffers adipic acid shortage amid strong demand in Asia

14 April 2010 15:14  [Source: ICIS news]

LONDON (ICIS news)--The European adipic acid market is at a critical point because of low availability resulting from stronger-than-expected demand in Asia and undercapacity due to previous plant closures, market sources said on Wednesday.

“I don’t remember in my history there being such a shortage. All I can say is the market is terribly short,” said an adipic acid buyer for the production of polyurethane.

The buyer said it believed that the tightness in Europe was the result of a combination of factors, including the closure of Invista’s 270,000 tonne/year facility in the UK, as well as closures in the US, and “the extreme and sharp demand in China” for nylon and non-nylon applications.

“It’s not a matter of price, it’s a matter of getting the product,” said the buyer.

According to a major producer, there were two main reasons for the current state of the European adipic acid market.

“In 2008, people closed down, especially Invista, and there have been no new capacities in China. The Chinese thought that there would be too much material, so nobody invested,” said the major producer.

“Demand in Asia is booming, China is booming, India is booming.”

A second major producer, which also voiced concerns about low availability, expressed the need to narrow the gap between the values of adipic acid in Europe and those in Asia.

“The price gap between Europe and Asia is substantial, because the price increase in Asia started earlier,” said the second producer, adding that European suppliers would continue to export to Asia in May, which would compound the already tight supply situation.

In Asia this week, spot adipic acid moved up $50/tonne (€37/tonne) to $2,600-2,700/tonne CFR (cost and freight) NE (northeast) Asia, according to data from global chemical market intelligence service ICIS pricing.

In Europe, a producer and a distributor both valued spot adipic acid at €1,800-1,900/tonne FD (free delivered) NWE (northwest Europe).

($1 = €0.74)

For more on adipic acid ICIS chemical intelligence
Read John Richardson and Malini Hariharan’s Asian Chemical Connections blog
To discuss issues facing the chemical industry go to ICIS connect

By: Julia Meehan
+44 20 8652 3214

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