20 February 2013 14:19 [Source: ICIS news]
LONDON (ICIS)--NF Trading’s two 30,000 tonne/year adipic acid (ADA) plants in the Ukraine remain shut because of poor margins, a company source confirmed on Wednesday, despite suggestions in the market of a restart.
NF trading halted production at the first of its two plants in mid-December 2011. That plant had originally been scheduled to come back on stream in March 2012, but continuously weak margins have led to it remaining offline.
Production at the second plant was suspended at the beginning of May 2012 because of weak margins.
There had been talk in the market of a restart, but this was denied by the company source.
Between July 2011 and January 2013, ADA contract prices have fallen €195-225/tonne ($260-300/tonne). During the period from July 2011 to February 2013, upstream benzene prices have increased by €286/tonne.
As a result, European ADA producers are targeting February contract price increases of up to €70/tonne to restore margins lost against upstream benzene in the past 18 months.
Buyers, however, have countered that in light of a €113/tonne fall in the February benzene contract price, ADA hikes of €70/tonne would be too far and too fast, considering that their own margins are weak.
Views on demand are sharply divided, depending on region and end-use. Consumption in Southern Europe is weaker than in northern Europe because the south has been more heavily affected by the macroeconomic downturn – which has limited consumer purchasing power.
“Demand is healthy, not excellent, for us it's healthy demand. Maybe 2-3% below February last year - especially southern Europe. No big problems in Scandinavia and German speaking countries. [We’ve] heard about a recovery in Germany - it looks pretty good,” an adipic acid compounder said.
Sources in southern Europe, however, said that demand is very weak, with some estimating demand in February 2013 at up to 30% below February 2012 levels.
“Demand is lousy, I must say - not a normal level... by memory I would say 20-30% lower in February year-on-year,” a southern European trader said.
($1 = €0.75)
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