Europe November ADA prices fall €40/tonne on benzene costs

04 December 2013 23:59 Source:ICIS News

LONDON (ICIS)--European adipic acid (ADA) November contract prices have fallen by €40/tonne ($54/tonne), which is just above half of the upstream November benzene contract price reduction of €78/tonne, sources said on Wednesday.

Some buyers in recent weeks have said that the market is oversupplied, allowing them to achieve price decreases of up to €100/tonne.

Some producers said they managed to limit decreases to €30/tonne to protect their margins. Prices at either extreme were not widely confirmed. 

Prices settled at a range of €1,695-1,750/tonne on a FD (free delivered) NWE (northwest Europe) basis.

Meanwhile, market participants offered different views on how a €109/tonne increase in December benzene price would affect December ADA prices. 

Buyers downplayed the latest increase in the price of benzene, saying that ADA prices could roll over or even fall by up to €20/tonne because destocking will accelerate in December and lead to lower demand. A buyer expects 35% lower demand in December versus November because of destocking.

A producer, however, said it will push for a 50-50 sharing of the cost pass through from the increase in the cost of benzene, saying that would be a “fair compromise” between buyers and sellers.

The producer estimates the passthrough to cost €81.75/tonne, which means that half, or €40.88/tonne, would be its target price increase for December. The producer said it will not accept a decrease in prices because it needs to protect its margins.

($1 = €0.74)

By Vladimir Guevarra