07 December 2012 05:21 [Source: ICIS news]
By Judith Wang
SINGAPORE (ICIS)--Spot adipic acid prices in Asia have been increasing on the back of rising cost of feedstock benzene, but further gains may be limited by continued weakness in demand, industry sources said on Friday.
On 5 December, ADA was assessed at $1,800-1,850/tonne (€1,386-1,425/tonne) CFR (cost and freight) NE (northeast) Asia, up by $20-30/tonne week on week, according to ICIS.
Prices have gained 16% since August, tracking movement in benzene values, which surged 22% at roughly the same period, according to ICIS.
“The benzene prices are too high, so we have to increase our adipic acid prices to recoup margins. We are falling in the red in the past few months on higher benzene cost,” a regional producer said.
At midday, benzene prices in Asia were quoted at $1,470-1,500/tonne FOB (free on board) Korea, according to ICIS.
ADA demand, however, is at a year-end lull and is unlikely to support firmer values. The material is primarily used in the production of nylon 6,6 (or polyamide 6,6), as well as in the manufacturing of polyurethane, which is used in the soles of shoes and in polyester resins.
Buyers are resisting higher ADA prices as they are having difficult passing on the increased cost to their downstream products.
“Demand is still weak, especially in the year-end month. The current feedstock prices are too high for us and we also don’t have enough orders from our end-users,” an end-user in Taiwan said.
End-users in Taiwan, South Korea and China are cautiously purchasing cargoes, unwilling to build up their stocks with the year drawing to a close.
“I think the price increase will not last long as the year-end market is always weak,” another end-user said.
($1 = €0.77)
Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections
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