Escalating Feedstock Costs Counteract Diminishing Adipic Acid Demand
- 26-Sep-2023 3:50 PM
- Journalist: Nicholas Seifield
The price of Adipic Acid exhibited an upward trend during the first week of September, but it later stabilized in the fourth week. These fluctuations can be attributed to the strong cost pressure from the upstream raw material, Benzene, in the U.S. and European markets. The fluctuations in the cost of raw materials like Benzene often significantly impact the pricing of downstream products such as Adipic Acid, and this situation seems to have led to a period of price stability in the fourth week of September.
The upstream raw material, Benzene, rose by 8% and 11% during the third and fourth week of September 2023, influencing the production cost of the downstream derivative industries, including Adipic Acid. Consequently, manufacturers in the German market have quoted higher costs for their products, reflecting the aggressive rise in raw material expenses. This scenario underscores the intricate relationship between raw material costs and pricing dynamics in the Adipic Acid industry, with the market responding to external factors such as Benzene and crude oil price fluctuations. Furthermore, the downstream textile industry in the Eurozone region experienced a bearish trend, which can be partially attributed to the impact of higher interest rates. The downturn continued to be driven by a drop in demand for goods and services, with total inflows of new work falling in September 2023. Manufacturing new orders continued to fall particularly sharply, although the rate of decline was weak in the German market.
At the close of the third quarter, U.S. businesses indicated a general stagnation in their output. Both manufacturers and service providers have reported subdued demand conditions. Adipic Acid manufacturers experienced a decline in new sales and fresh orders, although the pace of decline was slightly less pronounced. Additionally, there has been an increase in cost pressure as input prices rose at a noticeable rate. On the demand side, the downstream textile industry hasn’t moved much in the domestic market due to the high interest, rising fuel prices hurting the consumers purchasing power, and eroding living standards.
The price of Adipic Acid was hovering around USD 2353/MT on a FOB Texas basis during the fourth week of September 2023.
Anticipated higher demand for Adipic Acid is on the horizon, driven by the approaching festive season. Buying activities from the downstream PA66 industry are projected to increase in October 2023, potentially boosting Adipic Acid demand in both regions. Additionally, uncertain raw material prices are also attributed to influence the Adipic Acid prices.