FocusChina adipic acid tumbles 36% on weak demand from PU sector

07 November 2011 06:39  [Source: ICIS news]

By Doreen Zhao

SHANGHAI (ICIS)--Adipic acid prices in China have shed 36% over the past two months because of weak demand that will likely to continue for the remainder of the year, market sources said on Monday.

Spot values declined by around yuan (CNY) 7,000/tonne ($1,104/tonne) from end-August to CNY12,200/tonne at the end of October, according to ICIS data.

Surplus adipic acid supply in the international markets found its way into China in the months of August and September, dampening domestic prices of the material given lacklustre demand, market sources said.

China imported a total of 9,664 tonnes of adipic acid in September, up 31% month on month and more than triple the volume recorded in August, data from China Customs showed.

Domestic production was lower than usual since August but this failed to halt the slide in prices of adipic acid.

For the three months covering August-October, China’s output of adipic acid totalled 168,100 tonnes, according to Chemease, an ICIS service in China.

The number translates to a monthly production of 56,000 tonnes, about 8% lower than the usual output each month, partly because of turnarounds at major facilities.

In September, Henan Shenma conducted a 20-day maintenance at its 150,000 tonne/year adipic acid plant, which has a 50,000 tonne/year and a 100,000 tonne/year lines, at Pingdingshan, Henan province.  

Xinjiang Tianli, meanwhile, had a 45-day turnaround at its 75,000 tonne/year facility at Dushanzi from August to September.

Demand for adipic acid coming from the main downstream polyurethane (PU) sector has been extremely weak. In late October, PU plants operate at just about half of capacity, market sources said.

PU accounts for 60-70% of the total consumption of adipic acid in China.

China’s exports of PU derivatives like synthetic leather have weakened as the country’s major trading partners - the US and the eurozone – are embroiled with their respective economic and financial difficulties, market sources said.

Within China, PU producers face credit constraints as the government continued to tighten its monetary policy to halt the continued spikes in consumer prices. The appreciation of the yuan against the US dollar also poses challenges to exporters.

Going into next year, China is expected to see its domestic production ballooning to 1.76m tonnes/year, more than double the current capacity of 730,000 tonnes/year, with a total of eight new projects slated to come on stream in the near term.

Producer	Capacity (tonnes/yr)	Start-up dates	Note
Shandong Haili	150,000	End- 2011
Hualu Hengsheng	160,000	End-2011
Chongqing Fuxiang	160,000	Early 2012	For own nylon6-6
Shandong Hongye	140,000	Early 2012
Shandong Haili	150,000	Early 2012	For own nylon6-6
Henan Shenma	50,000	Early 2012
Hebei Kailuan	150,000	2012
Shanxi Yangmei	70,000	2012

($1 = CNY6.34)

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Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections

By: Doreen Zhao

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