Downstream Sectors Suffer, Europe Adipic Acid Prices Setback in February
Downstream Sectors Suffer, Europe Adipic Acid Prices Setback in February

Downstream Sectors Suffer, Europe Adipic Acid Prices Setback in February

  • 06-Mar-2024 2:19 PM
  • Journalist: Shiba Teramoto

During February 2024, the price of Adipic Acid remained in a bearish pattern, largely due to weak orders from downstream sectors and other economic factors impacting consumer sentiments. Despite an increase in the cost of raw material Benzene approximately by 7% on a FOB Hamburg basis, and feedstock Cyclohexanone prices skyrocketed during this period approximately 2% over the previous week in the European market, there was no significant improvement in the demand for Adipic Acid. In the FOB Hamburg Basis, the Adipic Acid settled by 3% decline during the week ending March 1, 2024.

Midway through Q1, raw material deliveries were delayed, purchasing costs increased, and production capabilities were disrupted by the persistent effects of the Red Sea crisis, which presented difficult conditions for European manufacturers. A number of manufacturers mentioned that they had to make the difficult decision to either pay more to source from closer to home or tolerate delays from rerouted shipping. This occurs at a time when manufacturers are already responding to the sluggish demand with more cost conservatism, as evidenced by additional job, purchasing, and inventory cuts in February. Delays, disturbances, and increased expenses resulting from shipping rerouting away from the Red Sea and Suez Canal also affected export demand.

Reduced sales volumes, negative market sentiment, and production schedule disruptions as a result of the Red Sea crisis have all contributed to a weakening demand for Adipic Acid in the textile industry from both local and foreign customers. Although they still have capacity, suppliers are having difficulties, partly because of their supply networks for basic materials. The manufacturing sector experienced a consistent decrease in backlogs of work due to weak demand conditions. The market has enough Adipic Acid available to suit domestic needs, thus new orders from potential consumers slowed down. Adipic Acid deals were average, particularly with downstream consumers behaving cautiously and with little interest in hoarding. Companies saw a reluctance on the part of clients, which is related to the current state of political and economic unpredictability as well as higher financing expenses.

Although the demand for Adipic Acid in the European region has not improved, it is expected that the price of Adipic Acid will rise in the coming weeks due to the upper side feedstock prices and the improvement from the automotive sectors. The prolonged fighting in the Red Sea has an impact on trade activity, including the import and export of textile products might impact the final prices of Adipic Acid.

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