02 May 2012 23:59 [Source: ICIS news]
LONDON (ICIS)--European adipic acid April contract prices have settled at a rollover to a decrease of €40/tonne ($53/tonne) depending on starting point, buyers and sellers said on Wednesday.
April adipic acid contracts were finalised at €1,470-1,630/tonne FD (free delivered) NWE (northwest Europe).
Falls of €40/tonne at the top end of the range were caused by weakening demand and a €37/tonne decrease in the upstream benzene April contract price.
Consumption is low because of macroeconomic fears which have not only reduced European demand, but have also caused a fall in export volumes to Asia. Europe is a major exporter of adipic acid to Asia.
Peak Season demand in the Asian shoe-sole sector ended early this year as a result of general economic weakness. Typically the shoe-sole season would end in May but ended this year in mid-April.
European April contract prices at the low end of the range rolled over from March, however, because of weak adipic acid margins.
Despite feedstock cyclohexane (CX) cost falls in March and April, April CX prices are €189/tonne higher than they were in October 2011, a rise of 22%.
Compared with October 2011, April adipic acid contract prices are €40-100/tonne lower, a fall of 2-6%. This has resulted in low margins for producers.
“What is strange is that we had the same raw material costs in October, so I think [producers’] margins have decreased,” a buyer said.
One buyer saw contract prices as low as €1,320/tonne FD NWE for April, but this was not widely confirmed. Spot prices continue to trade below contract levels, with spot on offer from the Ukraine for as low as €1,300/tonne FD NWE as some traders in eastern Europe look to destock.
Discussions for May contracts have not begun, but the majority of sources predict that following an initial May benzene contract settlement at an increase of €58/tonne, adipic acid contracts will finalise at a rollover as low demand will be counterbalanced by high costs.
“There’s pressure on spot [markets] from the Ukraine... otherwise we think it’ll be a rollover in May on low margins,” and adipic acid buyer said.
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