Lower export volumes from Europe and the US into Asia also lent the support to the adipic acid market
Spot adipic acid prices in Asia have steadily risen since mid-April on the back of rising cost of feedstock, but tepid demand could soon put a lid on surging prices of the material, industry sources said on 16 July.
For adipic acid of Chinese origin, prices increased to $1,700-1,720/tonne CFR (cost and freight) NE (northeast) Asia in the week ended 9 July, bringing the cumulative gain over the past four months to 9.3%, according to ICIS.
China is the biggest exporter of adipic acid in Asia.
Major Chinese exporters raised their adipic acid offers by $50/tonne over a two-week period to $1,750-1,780/tonne CFR NE Asia, against buying ideas at $1,700/tonne CFR NE Asia or below.
“Based on our costs, we have to sell at least above $1,750/tonne to break even. Now we keep on losing money,” a Chinese producer said.
Liaoyang Petrochemical, a major adipic acid producer in China, has kept its 140,000 tonne/year adipic acid plant idle from early that week because of negative margins.
Adipic acid cargoes from other countries in Asia, such as South Korea and Japan, also increased, rising by an average of $50/tonne or 2.7% to $1,850-1,950/tonne CFR NE Asia from early April, according to ICIS. Producers felt compelled to raise prices to pass on the high feedstock cost to end-users, market sources said.
A major northeast Asian producer increased its offers to $1,950-2,000/tonne CFR NE Asia to recover margins, representing a $120/tonne increase from its June settlement price.
Some end-users posed a strong resistance to these prices, citing continued weakness in demand.
Reduced volumes being exported by Europe and the US into Asia also lent the support to the adipic acid market in this region, sources said.