FocusAsia adipic acid prices may rise on high feedstock costs

06 September 2013 03:38  [Source: ICIS news]

Adipic acid is a raw material of polyester polyols, which are used to manufacture shoe soles.By Judith Wang

SINGAPORE (ICIS)--Asia’s adipic acid (ADA) prices may rise further in September on the back of firm feedstock costs and the expectation of improving off takes amid the traditional peak demand period, industry sources said.

The ADA prices of China-origin cargoes rose to $1,650-1,700/tonne (€1,254-1,292) CFR (cost & freight) NE (northeast) Asia in the week ended 4 September, up by 9% from early July, according to ICIS.

Prices of international-origin ADA cargoes rose by 2% to $1,800-1,880/tonne CFR NE Asia during the same period, ICIS data showed.

The recent hike in crude and benzene prices lent support to ADA prices. As a result, major producers raised their prices to recoup margins, industry sources said.

Asia’s weekly benzene prices rose by around 7% from early July to $1,263-1,280/tonne FOB (free on board) Korea on 30 August, according to ICIS data.

“The benzene prices may increase further if crude continues to go up, so we  have no choice but to raise ADA prices as our cost increased too much,” a regional producer said.

On the supply front, most ADA producers in Asia were running their plants at reduced rates of 50-80% capacity, weighed by higher feedstock costs and squeezed margins.

The reduced supply and the expectation of stronger demand will likely push prices up for September, a trader said.

“September and October are usually peak demand seasons, although at this point, the demand did not recover very significantly, maybe from mid or late September,” an end-user in Taiwan said.

“If our downstream shoe sole and polyurethanes (PU) sectors could pick up soon, we don’t mind that producers increase ADA prices, as long as we could pass on the cost,” an ADA buyer said.

Additionally, domestic prices in China are rising sharply in the past few weeks amid tight supply and firm benzene prices.

The domestic Chinese cargoes were traded at yuan (CNY) 11,100-12,800/tonne ($1,814-2,092) ex-tank in eastern China on 4 September, up by CNY100-200/tonne from the previous week, sources said.

Some traders have started to procure amid the low inventory and in anticipation of further price increases, market players said.

“I think prices will rise higher as some buyers will build some stocks ahead of China’s National Day holiday from 1 October,” 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 to make the soles of shoes and polyester resins.

($1 = €0.76, $1 = CNY6.12)

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

By: Judith Wang
+65 6780 4359

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