Europe adipic acid market tightens, producers bullish on prices

LONDON (ICIS)–Players on both sides of the European adipic acid market have acknowledged that it has become tighter, and it is recognised that sellers will aim to translate this into firmer prices, sources said on Wednesday.

The current shifts in the market apply only to freely negotiated business at present, as many contracts are conducted on a formula linked to the movement of feedstock costs.

One supplier said on Wednesday that there would be significant price escalation this month. Although lower benzene and cyclohexane (CX) values will reduce producer raw material costs by about €10/tonne, this supplier asserted that it was already enjoying increments of around €100/tonne.

It has already achieved of around €100/tonne despite lower benzene and cyclohexane (CX) values, which would reduce producer raw material costs by about €10/tonne.

Another producer stated that it, too, was targeting an increase, although it would not be dramatic because it wanted to avoid making “an open door to the Chinese”. It estimated the proposed rise at not more than €50/tonne. The other supplier considered that this seller “was not reading the signs right”.

Buyers have also agreed that they perceive some shortness in the market. One said it did not expect that to go away immediately but that it would prevail for some months to come, bringing with it upward pressure on prices.

It is reliably believed that one producer has some technical problems associated with intermediate KA oil. These difficulties should be resolved within about a month, a buyer said. However, this situation aggravates a market balance that has swung decisively in favour of producers since late last year.

As well as specific production issues, Invista has exited the market, as a supplier but not as a consumer, and there is healthy demand. This arises not only from external customers but also as a result of increased consumption on the part of adipic acid producers’ own internal polyamides units downstream.