SINGAPORE (ICIS)--Spot adipic acid (ADA) prices in Asia has been falling for nearly two months and may continue to weaken amid falling costs of feedstock benzene, and ample supply, market sources said on Thursday.
In the week ended 26 April, prices for Chinese ADA were assessed at $1,350-1,400/tonne CFR (cost and freight) NE (northeast) Asia, down by 18% from 8 March, according to ICIS data.
For ADA from other countries in the region, the price decline was more moderate at 3% over the same period to $1,630-1,700/tonne CFR NE Asia, the data showed.
Falling prices of feedstock benzene, as well as ample supply in China, has been exerting downward pressure on the regional ADA market, industry sources said.
Regional benzene prices plummeted by more than 10% since March to the high-$700/tonne FOB (free on board) Korea levels early this week, tracking weakness in the downstream styrene monomer (SM) market.
Meanwhile, China has sufficient supply of ADA with the completion of plant turnarounds at two major producers in the country.
Henan Shenma, which has a 400,000 tonne/year ADA capacity, had a month-long maintenance at its plants, while Tangshan Zhonghao’s 150,000 tonne/year plant also underwent a turnaround from end-March to early April.
Consequently, domestic ADA prices have weakened by around yuan (CNY) 2,000/tonne from early March to CNY10,000-10,200/tonne ex-tank on 26 April, market sources said.
Major Asian suppliers have had to reduce their offers to entice buying interest, in view of the decline in Chinese domestic prices, they said.
However, most end-users were reluctant to procure cargoes as they expect ADA prices to fall further in the coming weeks as the peak demand season has ended.
“Buying interest is very weak, and we did not receive many orders this month … due to the bearish outlook,” a major producer said.
Demand from the polyurethane (PU) and shoe sole sectors typically slows down during the summer season in northeast Asia.
“Our sales has already been slowing, so we are not rushing to buy more feedstock,” a Taiwanese end-user said.
Focus article by Judith Wang
Picture (top): Nylon cord. Adipic acid is used in the production of nylon. (Photographer: Denis Closon/REX/Shutterstock)