China ADA halts fall on plant outage; sellers mull price hikes

SINGAPORE (ICIS)–Spot adipic acid (ADA) cargoes from China halted their price downtrend this week amid an unexpected shutdown of a major domestic plant, while producers are mulling hiking prices amid limited supply.

In the week ended 27 March, spot prices were assessed stable at $1,150-1,200/tonne CFR (cost & freight) NE (northeast) Asia after falling for two weeks, ICIS data showed.

Shandong Haili Chemical Industry, a major Chinese ADA producer, was forced to shut down its 150,000 tonne/year plant for safety checks after the 21 March fatal blast at Yancheng in China’s eastern Jiangsu province.

The plant shutdown may last one month, market sources said.

Adipic acid is primarily used in the production of nylon 6,6, with key end-uses in automotive textiles, shoes and shoe soles. (Photo by Diego Azubel/EPA/REX/Shutterstock)

“The market fundamentals are changing now as there is no clear timeline when Haili’s plant will be restarted, [the shutdown will] probabl[y] one month [or] may be longer,” a regional trader said.

“Supply will become limited in the near term and ADA prices may not fall further,” the trader said.

The unexpected shutdown of Shandong Haili’s plant lent some support to market sentiment, as most suppliers were not rushing to offload cargoes and preferred to wait for a clear price outlook to emerge.

Some Chinese exporters are considering raising offers, but they are also worried higher prices will hurt downstream demand.

“Whether price rise can materialise or not still hinges on demand,” a major producer said.

On the demand front, buyers’ and end-users’ immediate requirements were mostly covered, while more discussions expected to kick off in April.

“Demand is expected to improve further in April amid the peak demand season, albeit at a slower pace given global economic slowdown,” a downstream buyer said.

Focus article by Judith Wang