How long will adipic acid fall?

2The quotation of adipic acid continued to decline in the month, and the overall trading volume was light. In the first ten days of March, the supply and demand sides were still in a stalemate, and the price increase was hindered. As of March 9, the quotation of adipic acid in East China was between 9700-10300 yuan/ton.

Supply side:

In terms of cost, as of February, the average price of crude oil has been slightly lowered by nearly US$1/barrel compared to January due to the impact of the Fed’s interest rate hike. The month-on-month decrease was 1%; the average price of pure benzene market rose by 70 yuan/ton compared with January, a month-on-month increase of 0.6%, and the support of AA cost side did not change much. In terms of operating rate, some plants in Henan Shenma and Chongqing Huafeng shut down in mid-to-late February, while Shandong Haili and Jiangsu Haili restarted two sets of plants. So far, the overall operating rate has risen slightly. Compared with January, the import volume of adipic acid also increased significantly in February, with an increase of more than 15%.

Figure 1 Adipic acid and its upstream from February 1st to February 28th, 2023 Average market price of raw materials (unit: yuan/ton, US dollar/barrel)

Data source: Tiantian Chemical Industry Network

Demand side:

As the main downstream industry of AA, the market of PU slurry and shoe sole liquid is fluctuating. Although the order volume has improved after the festival, it has not been as good as expected. The inventory before the festival is still out and the digestion of the terminal industry is hindered. The market operating rate is around 45%. Therefore, the buyer does not pay for the supplier’s attitude towards the market, and is resistant to high-priced shipments, and enters the market cautiously, mostly holding a wait-and-see attitude. As other downstream industries, TPU and PBAT have also seen an increase in industry demand, an increase of about 5% from January.

Market outlook forecast:

In the short term, crude oil will continue to fluctuate and fall, pure benzene will still have an upward range, and the support on the cost side is limited. On the demand side, it is still difficult to keep up with the terminal demand, and the continuous rigid demand is dominated by small orders; as the inventory gradually decreases, the supplier will produce on demand, and the supply and demand sides may be in a see-saw situation. On the whole, the adipic acid market will be sideways in the middle and late March.