FocusAsia ADA under pressure; tightening supply to temper falls

28 June 2012 07:27  [Source: ICIS news]

By Judith Wang

ADA goes into polyurethane, which is used in the soles of shoes and in polyester resins.SINGAPORE (ICIS)--Spot adipic acid (ADA) values in Asia are still under pressure to decline because of poor demand, but a tightening of regional supply amid production cuts and delayed start-ups of new plants should help temper the price falls, industry sources said on Thursday.

On 27 June, ADA prices for international-origin cargoes were assessed stable week on week at $1,550-1,650/tonne (€1,240-1,320/tonne) CFR NE Asia, after shedding 18% from mid-March, according to ICIS.

“We are losing money when we sell. The prices are too low, and we have to cut output to avoid further losses,” a major Chinese ADA producer said.

Major Chinese ADA producers, including Shandong Haili, Shandong Hongye, are currently running their plants at reduced rates of around 70-80% in light of soft demand and falling ADA prices.

Meanwhile, around 440,000 tonnes/year of new ADA capacity in China that were supposed to come on stream in the first half of the year have been delayed because of the poor market conditions, industry sources said.

The start-ups of the new plants were pushed back to the second half of the year, they said.

Elsewhere in Asia, Asahi Kasei is operating its 120,000 tonne/year adipic acid plant at Nobeoka, Japan, at around 70-80% of capacity after the unit was restarted in early June, a company source said.

In South Korea, Rhodia Polyamide is mulling cutting production at its 140,000 tonne/year adipic acid (ADA) plant in Onsan, citing weak demand.

“I hope the production cut can help the market to go up after dropping [for] so many weeks,” a trader said.

“Most buyers were adopting a wait-and-see stance because of the volatile crude prices and economic uncertainty. They will not actively buy cargoes, and just to cover their basic requirement,” a regional producer said.

Uncertainties in the global market amid the eurozone debt crisis, US economic weakness and a slowing Chinese economy have been deterring consumption for most finished products, thereby reducing demand for petrochemicals, industry players said.

The weak demand for ADA may last up to July and August because of a lull season in the downstream polyurethane (PU) production. PU manufacturing activities usually pick up in September.

ADA is primarily used in the production of nylon 6,6 (polyamide 6,6), as well as in the manufacturing of polyurethane, which is used in the soles of shoes and in polyester resins.

($1 = €0.80)

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

By: Judith Wang
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