Corrected: NF Trading to halt second adipic acid line in May

11 April 2012 11:00  [Source: ICIS news]

Correction: In the ICIS news story headlined “NF Trading to halt second adipic acid line in May” dated 11 April 2012, please read in the first paragraph … a company source confirmed on Wednesday … instead of … a company source confirmed on Tuesday … A corrected story follows.

LONDON (ICIS)--NF Trading will halt production on the second of two adipic acid (ADA) lines at its 60,000 tonne/year plant in Ukraine for planned maintenance at the beginning of May, a company source confirmed on Wednesday.

Each ADA line has a nameplate capacity of 30,000 tonnes/year. Production on the first line was suspended in mid-December because of unfavourable trading conditions. The line was originally scheduled to come back on stream in March, but continued low margins have led to it remaining shut.

The outage on both lines will continue through May, the company source confirmed. It may also be extended if there is no improvement in margins.

Although feedstock cyclohexane (CX) costs fell in February and March, April CX prices are €189/tonne higher compared with October 2011 – a rise of 22%.

European April ADA contract negotiations are ongoing. Nevertheless, compared with October 2011 March ADA contract prices are unchanged at the top end and €100/tonne lower at the bottom – a fall of 6% at the low end.

This has resulted in squeezed margins, which ADA producers claim are unsustainable.

European ADA producers are aiming for price increases of up to €50/tonne for April contracts, because of the need to recover profitability.

However, buyers argue that April contract prices should decrease – or at least roll over – because of weak demand and market oversupply.

The buyers said downstream markets cannot absorb a second month of price increases – following a €70/tonne increase in contract prices in March from February – particularly in the wake of the €37/tonne fall in the upstream benzene contract price. Contract negotiations are expected to be protracted

The oversupply is the result of weak European demand and a lack of buying interest in Asia, which has led to higher volumes being kept in Europe than expected.

Low European consumption is the result of reduced consumer purchasing power. However, demand is improving because of seasonal factors, particularly in the shoe-sole sector.

($1 = €0.76)

By: Mark Victory
+44 208 652 3214

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