Europe ADA buyers targeting August contract price reductions

07 August 2013 17:20  [Source: ICIS news]

LONDON (ICIS)--European adipic acid (ADA) buyers on Wednesday said they are targeting August contract price cuts because of the €32/tonne ($43/tonne) reduction in the upstream benzene contract price and the expected lower consumption of ADA because of summer holiday shutdowns.

One buyer said ADA producers should pass their savings to customers. It estimated that August prices should be €15-20/tonne lower than July prices, tracking the fall in benzene.

"If producers are seeing lower costs, I would expect them to pass this on to customers, especially in current times when adipic is not short and demand is weak … every customer has shutdowns in July and August," the buyer said.

Buyers expect demand in August to be up to 50% lower than the average monthly consumption because of the summer shutdowns and some destocking.

A producer said there are no big changes expected in the levels of supply and demand in August and it therefore forecasts a rollover in prices. Other producers are yet to give firm price targets.

So far, there is little expectation among buyers that demand for ADA will recover in the fourth quarter.

"There is hope that higher demand will come but I’m not sure if we'll see that. It's too early to say. Hope is the last thing which dies," a buyer said.

ADA contract negotiations are at an early stage. Typically European ADA contracts settle at the end of each month.

($1 = €0.75)

By: Vladimir Guevarra
+44 208 652 3214

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