In August, the adipic acid market ran for only a few working days at the beginning of the month, and it opened the way down. As of August 24, the mainstream price of China's adipic acid market was 10,400 yuan / ton, down 600 yuan / ton from the beginning of the month, a decline of 5.45%. The low level of raw material shocks, the restart of maintenance devices, the low negotiation of foreign trade orders, the empty mentality of the industry, etc. have all played a role in the process of market downturn, but the most important limiting factor is still the contradiction between supply and demand. Soon to enter the traditional "golden nine silver ten", can the peak season effect of demand be realized?
Monthly average price trend chart of the domestic adipic acid market from 2016 to 2021
Judging from the price trend of the adipic acid market in the past 6 years, except for the peak season effect in 2015 and 2019, which was not obvious, other years have seen an upward trend in September and October. Among them, the main influencing factor in 2015 was the sluggish demand in the second downstream, and the price continued to decline. Although at the end of August and the beginning of September 2015, the main business of raw material pure benzene was listed up twice, and the cost support was enhanced, but the demand for adipic acid was negatively constrained, the rebound power was insufficient, and the spot low price was negotiated. The main reasons for the lack of peak season in 2019 are: although the main list of raw material pure benzene has been raised many times in September, the factory has also followed up the upward adjustment and listing, and the cost support is strong; but the Taihua and Tianli devices have restarted, and the supply has increased to hedge the factory's attitude towards the market; at the same time, the overall performance of the downstream demand side is weak, and the imbalance between supply and demand suppresses the market to rise sharply. A common factor in the low peak season of the adipic acid market in 2015 and 2019: Although the raw material pure benzene is supported by the high level, the imbalance between supply and demand is still the most important limiting factor.
At present, the adipic acid market is still facing this dilemma: although Shenma Chemical has a maintenance plan in October, Tangshan Zhonghao has stopped for maintenance since late July to mid-August, and has now resumed normal operation; Shandong Hongding Phase II 70,000 tons of device has recently been put into feeding and is expected to reach full capacity at the end of the month; Jiangsu Haili 300,000 tons of units have been parked for more than two years since the "Xiangshui Incident" in March 2019, and a set of 150,000 tons of units is planned to be put into feeding at the end of August; Yangmei Taihua 140,000 tons of devices have been parked for maintenance since June 15, 2021. A restart is scheduled for the end of August. If both plants are restarted smoothly, the supply of adipic acid will increase significantly, roughly estimated to increase by about 20,000 tons in September.
The market trend of domestic adipic acid and related raw material products in 2021
However, due to the restrictions on the high-level operation of related raw materials such as BDO, DMF, and pure MDI, the overall operating performance of the downstream is general: the main downstream PA66 is affected by the shortage of other raw materials such as adiponitrile; PU pulp, TPU, PBAT, etc. are clamped by other raw materials DMF, pure MDI, BDO high-level operation, and the terminal downstream customers have weak acceptance of high costs, and it is more difficult to start to raise the burden. At the same time, according to the historical experience of the industry, September to October is the traditional peak demand season, and most downstream industries will usher in a wave of stocking from mid-to-late August to promote the market. However, in addition to the high cost constraints this year, force majeure factors such as the new crown epidemic at home and abroad, weather disasters in many regions, and government power cuts have also become important limiting factors. Affected by this, the middle and lower reaches of the industry in some areas have been forced to reduce production, logistics and transportation are restricted, etc., and the start of the peak season is slow. The performance is particularly evident in east China, where demand is concentrated, and the recent epidemic has been particularly restricted.
In addition, as a high-level adipic acid industry with an export dependence of 25%-35%, the export performance in recent months has also been general: affected by the weak support of raw materials and weak domestic spot prices, the main manufacturers have lowered their offers and the profit space is not large; the epidemic in many foreign countries and regions is serious, and the demand is reduced; the logistics costs are high, and the shortage of ship space affects the progress of order trading.
On the whole, there is some uncertainty in the recent trend of crude oil and pure benzene, and the cost-side support guidance is not strong. The second phase of Shandong Hongding, Jiangsu Haili and Taihua restart will become the biggest bearish in the current adipic acid market, and the contradiction between supply and demand in the short term is still the most important factor restricting the upward trend of the market. At present, near the settlement cycle, the factory attitude and control strength are the main concerns of the industry. There are many uncertainties in the adipic acid market in September, and the industry needs to pay close attention to market changes and rationally operate.