FocusAsia adipic acid to gain on rising benzene cost, better demand

03 February 2012 04:43  [Source: ICIS news]

By Judith Wang

Adipic acid is a raw material of polyester polyols, which are used to manufacture shoe soles.SINGAPORE (ICIS)--Spot adipic acid prices in Asia are expected to rise further in near-term as major suppliers hike offers, citing high feedstock costs, as well as improving demand, industry sources said on Friday.

On 1 February, adipic acid prices were assessed at $1,730-1,850/tonne (€1,315-1,406/tonne) CFR (cost and freight) NE (northeast) Asia, up by $30-50/tonne week on week, according to ICIS.

A major regional producer increased its offers for February cargoes by $50/tonne to $1,900/tonne CFR NE Asia.

“Feedstock prices are rising, and we can see the demand is also gradually recovering, therefore, we raised prices after the week-long Chinese holiday to follow the uptrend,” the producer said.

Feedstock benzene prices had risen by $80-85/tonne over the past month to $1,175-1,185 FOB (free on board) Korea on 2 February, according to ICIS.

Demand for adipic acid has been recovering after the Lunar New Year holiday in China (22-28 January), given the upcoming peak manufacturing season in its major downstream – the polyurethane (PU) sector – in February and March.

Adipic acid is also used as raw material of polyester polyols, which are used to manufacture shoe soles.

Supply of the material, on the other hand, is limited in China, with the 140,000 tonne/year adipic acid plant of major producer Shandong Hongye Chemical Industrial Group currently shut for a month-long turnaround that started in early January, market sources said.

This, coupled with market player’ low inventory of the product, bolsters expectations that adipic acid spot prices will increase.

“Many buyers called me up and asked me to give offers, but we could not sell cargoes now as our plant is still undergoing maintenance,” said a source from Shandong Hongye Chemical.

In February, major Chinese producers announced their February nominations at yuan (CNY) 13,500-14,000/tonne ex-tank, up CNY2,000-2,500/tonne from January nominations, sources said.                                                                                  

“Sellers are very bullish about the market after the holiday, although some buyers resisted the price growth,” a China-based trader said.

“But I think some downstream buyers will gradually start to build some stocks ahead of the upcoming of peak season if prices continue to rise,” the trader said.

($1 = CNY6.31 / $1 = €0.76)

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

By: Judith Wang
+65 6780 4359

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