Europe June adipic acid contracts fall €20-30/t on weak demand

04 July 2012 23:59  [Source: ICIS news]

LONDON (ICIS)--European adipic acid (ADA) June contract prices have settled at a reduction of €20-30/tonne ($25-38/tonne) from May because of weak demand, buyers and sellers said on Wednesday.

June contract prices were finalised at €1,450-1,550/tonne FD (free delivered) NWE (northwest Europe). Although some players agreed contracts at a rollover from May, June contract prices remained within the above range.

The decrease in contract prices came despite a €73/tonne increase in the upstream June benzene contract price, and was the result of low consumption.

Demand was weak throughout June because of bearish macroeconomic conditions, which have limited consumer purchasing power. Demand from the downstream fibre market has been most severely affected, with global fibre operating rates estimated as low as 50% by market players.

Consumption from the small- and mid-sized automotive industries is also weak. Nevertheless, premium automotive demand has been, so far, resilient to the downturn in wider economic conditions.

Because of the low season for both automotive and fibre production during the third quarter, ADA demand is not expected to increase until at least September.

“Demand is weak everywhere. Automotive and fibres [markets] won’t improve until at least September because of the low season,” an adipic acid buyer said.

Producers continue to complain about weak margins, and several are considering cutting back operating rates because of poor profitability.

NF Trading will not restart its two 30,000 tonne/year plants in Ukraine in the near future, because of low margins, a company source previously confirmed.

NF Trading halted production at the first of its two plants in mid-December. The plant was originally scheduled to come back on stream in March, but continued low margins have led to it remaining shut. Production at the second plant was halted at the beginning of May.

($1 = €0.79)

By: Mark Victory
+44 208 652 3214

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