In mid to early August, domestic adipic acid showed a weak upward trend. With a peak at the beginning of the month, the market gradually returned to rationality and prices showed a downward trend. According to the Commodity Market Analysis System of the Business Society, as of August 21, the highest level of adipic acid has dropped from 9800 to 9500 yuan/ton. The focus of market trading has gradually shifted downwards. At present, the market quotation range for adipic acid is between 9400 to 9500 yuan/ton. Fundamentally, maintain a favorable withdrawal from the raw material end and maintain a weak balance between supply and demand.

Cost side: Rising raw material prices are weak and falling from high levels

In August, crude oil continued to hover at a high level, providing a boost to the entire domestic chemical market. However, the upward trend of pure benzene prices was weak, with the main slowdown in the upward trend. The quotation of the main refinery has been partially lowered, and the supply side has shown a large volume of goods arriving at the port, resulting in a backlog of goods and supply pressure starting to emerge. The price of cyclohexanone has fallen from a high level, leading to market volatility and further pressure on supply and demand. It may not perform well in the later stage. From a cost perspective, the benefits of upstream raw material costs are gradually being exhausted.

Supply side: Enterprise equipment starts normally and supply is loose

From the perspective of market supply: In terms of equipment, the production of adipic acid has shown an upward trend this month, from 60% at the beginning of the month to 70% at present. Although the main manufacturers have mainly raised prices, prices have not been adjusted last week, and there may be expectations of price reductions in the future due to inventory pressure. The main reason is weak demand, and the manufacturer’s shipping speed has slowed down. At present, there is a lack of positive guidance on the supply side.

On the demand side: Demand remains weak and there is not much room for growth

Adipic acid is relatively weak downstream. The terminal procurement just needs support, and there are relatively few orders. Taking PA66 as an example, the long-term market has maintained a weak trend. Although market prices rebounded in August, the strength is limited compared to the previous decline, and the market is still hovering at a low point. The short-term slight increase only comes from the temporary shortage of supply caused by the shutdown of enterprise equipment. According to the Commodity Market Analysis System of the Business Society, the increase and decrease in PA66 since August has been 1.83%. At present, the market price of PA66 in Zhejiang region is around 18500 yuan/ton. In addition, the sluggish market performance of caprolactam and TPU in other downstream fields, as well as weak demand, is an important reason for constraining the fundamental improvement of adipic acid.

Future prospects

Business Society believes that there are still macro factors affecting the cost of crude oil in the near future. A stronger US dollar will continue to suppress oil prices, but supply shortages will also keep the oil market high. In the short term, high crude oil prices are mainly volatile. Pure benzene and cyclohexanone may experience a weak trend in the later stage, and the cost side benefits will continue to fade. The supply and demand sides have maintained a relative balance in the near future, and later equipment maintenance may be a hedge against weak demand. Overall, it is expected that adipic acid will continue to undergo a narrow adjustment in late August.