FocusAsia’s adipic acid prices likely to rise further in Sept/Oct

13 September 2012 04:49  [Source: ICIS news]

By Judith Wang

Adipic acid goes into making of shoe solesSINGAPORE (ICIS)--Asia’s adipic acid (ADA) prices are likely to rise further in September and October on the back of higher feedstock prices and growing buying activity amid the traditional peak demand season, industry sources said on Thursday.

Feedstock benzene weekly prices rose by 5% from late July to $1,170-1,225/tonne (€913-956/tonne) FOB Korea in the week ended on 7 September, according to ICIS data.

Asia’s ADA prices for international-origin cargoes increased by 9% from late July to $1,650-1,750/tonne CFR (cost & freight) northeast (NE) Asia in the week ended on 12 September, ICIS data showed.

A major ADA producer in northeast Asia said the feedstock benzene prices are too high, so it had to raise its offers to recover its margin.

Most of Asia’s ADA plants cut their operating rates in the past few months to cope with the squeezed margins and weak demand, sources said.

As a result, the inventory of producers and end-users was very low as they were unwilling to build any stock amid the uncertainties in the market.

Since the start of September, end-users said they received increasing orders compared with July and August. As a result, buying activity for ADA grew amid low inventory, market sources said.

“The ADA market is finally improving from this month as expected as September and October are usually peak demand seasons for shoe sole and polyurethane (PU) sectors,” an end-user said.

“Meanwhile, the downstream users will usually build some stocks before China’s National Day holiday in early October,” the end-user said.

China will enjoy an eight-day holiday this year from 30 September to 7 October.

Major regional producers raised their offers for September shipment, but it still needs to take some time for end-users to accept the price growth, market participants said.

“As long as upstream market remains firm, ADA prices will not likely to drop in the near term,” a trader said.

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

 ($1 = €0.78)

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

By: Judith Wang
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