Europe adipic acid contract prices fall again in October

Peter Gerrard

19-Oct-2016

LONDON (ICIS)–European adipic acid players confirmed on Wednesday that prices softened again this month, with contracts falling around €20-50/tonne from September.

Some sellers were able to limit the reduction roughly to the pass-through from the fall in the upstream benzene contract value for October. This number (approximately minus €24/tonne) will also apply automatically to the large volume of contracts fixed on a feedstock formula.

However, freely negotiated numbers have softened by as much as €50/tonne, according to one producer.

The larger declines are attributable to the lengthening of the market that began one to two months ago.

Just at the time that contract values have reflected that lengthening, various events have happened that have, at least potentially, tightened the market very swiftly, but after the negotiations on which this month’s numbers were based.

The explosion at BASF’s Ludwigshafen complex that has affected a wide range of products coming from that plant may have implications for adipic acid, although it is too early to know.

Secondly, LANXESS is contending with a curtailment of raw material due to a force majeure on nitric acid, and has had to reduce output. The company could not be reached for comment at the time of publication.

Added to this, low water levels on the Rhine are providing a logistical challenge, and Radici will soon go into a maintenance shutdown, taking further capacity out of the market in the near term.

Sellers are therefore warning that the market has taken on an unexpected character, which is likely to drive up prices in November.

Adipic acid contract prices, before discounts, are estimated at €1,615-1,690/tonne FD (free delivered) before discounts.

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