Asia adipic acid trade subdued; June downstream demand weak

Zhi Xuan Ho

27-May-2020

SINGAPORE (ICIS)–The Asia adipic acid (ADA) markets were weakly traded in May, with several key buyers in China and South Korea reducing contractual volumes and cutting back on spot purchases on consistently weak downstream demand.

Ongoing lockdowns and physical distancing measures in Asia to curb the spread of the coronavirus have caused most brick-and-mortar stores to remain closed, greatly reducing demand for PU, synthetic leather, and shoes.

Buyers reduced downstream operating rates amid a lack of demand for finished goods, which contributed to less incentive to stock up on material.

“We have no choice but to cut back on our purchases,” said a buyer.

“Some of our customers continue to request for delays or cancellations of orders made earlier this year, and the Taiwanese domestic markets are not doing well either,” the buyer added.

Producers in China sought higher prices amid hikes in key feedstock benzene values, but were met with low buying sentiment and strong resistance, leading to limited fluctuations in prices for the month.

International producers also faced difficulty in increasing offers for ADA, as buyers balked at the higher costs of international material and remained on the sidelines.

Sentiment for June offers remain bullish, however, as prices of benzene continues its uptrend. Supply is also tight on the international front, which should help support offers.

However, downstream sentiment remains bearish, with key buyers saying downstream manufacturing is not expected to rebound within the month.

Prices of China-origin ADA were last assessed at $800-850/tonne CFR northeast Asia, and prices of international origin ADA were last assessed at $1,000-1,050/tonne CFR northeast Asia, ICIS data showed.

ICIS Editorial Chart goes here

Focus article by Zhi Xuan Ho

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