China Adipic Acid Prices Gain Momentum in Early 2022 After Steep Fall in December

New year started on an optimistic note for Adipic acid market in China where prices gained significantly during the initial weeks of 2022. The rebound in the market sentiment came on the back of demand recovery from downstream textile sector and firm feedstock market.

Adipic acid prices have gained more than 2% in early January discussions in comparison to the late December assessments. Adipic acid pricing has benefited from the bullish rally of crude oil prices across the world stemming from speculations around Kazakhstan unrest. Increasing prices of crude oil prices have kept an upward pressure on Benzene value chain. Consequently, this has culminated into increased cost pressure over Adipic acid where Benzene forms a key upstream of Adipic acid.

Demand from downstream Polyamides has also shown early signs of increase in consumption which may further gain traction in the first quarter. Textile sector had a weak H2 of the last quarter where demand for Polyamides deteriorated caused by consumption decline from both domestic as well as international market in lieu of winter holiday season and waning spot activity induced by another Covid variant.

Supply side dynamics weakened in the later stages of the quarter where port congestions again resurfaced across key ports in China. Imminent production interruptions due to environmental concern in China in the wake of Winter Olympics may further dampen the supply dynamics.

As per ChemAnalyst, “Adipic acid prices are likely to keep the gained momentum in H1 of Q1 2022 as firm feedstock prices and demand recovery are expected to be the key price driving factors. Supply side dynamics are likely to remain weak in the coming weeks where production disruptions of key feedstocks may hamper operating rates for Adipic acid of several enterprises. China authorities have notified that several heavy industries are likely to endure production cuts in coming months.”