Adipic acid market withered trees meet spring

The time has entered March, and the peak season of the chemical market has finally arrived. With the strong rebound of the oil market, the cyclohexanone-adipic acid-PA66 industrial market has ushered in a post-Spring Festival outbreak, and adipic acid has temporarily gotten rid of the quagmire. As of March 15, adipic acid in East China has negotiated about 6750-6850 yuan (ton price, the same below), an increase of 1,300 yuan, or 23.6%, compared with the end of the Spring Festival holiday. Although the current price is difficult to compare with the same period last year, many people are relieved to escape the three-month downturn with the soaring east wind of the oil market. But can the adipic acid market really get out of the quagmire and stand up now?

Adipic acid is an important raw material for chemical products. Adipic acid in our country is mainly used to produce polyurethane and PA66, etc. Its importance in the chemical industry goes without saying. In 2015, our country's economic growth slowed down, and many downstream end point enterprises were under too much cost pressure. Faced with the impact of the rise of the South East Asia market, they had to operate at low load to reduce losses. This had a significant impact on the upstream raw material market. In addition, the international crude oil plunged sharply last year, causing the entire chemical industry to face a crisis. The market price of adipic acid continued to decline, profits were compressed seriously, and prices fell to the bottom. It was difficult to turn around for three months from November to February.

The excess of adipic acid in our country has long been highlighted in recent years. In 2015, the global adipic acid production capacity was about 4.50 million tons/year, of which China's production capacity was 1.91 million tons/year, accounting for 42.6%. In terms of relative production capacity, the output of adipic acid in our country reached 1.44 million tons/year in 2015, while the apparent consumption was only 1.28 million tons/year, and the self-sufficiency rate reached 112.5%. Since 2008, our country's adipic acid industry has flourished and the production capacity has increased rapidly. In 2014-2015, many projects are planned to be put into production, but in the end only Tangshan Zhonghao 150,000 tons/year and Chongqing Huafeng Phase II 160,000 tons/year officially drove. The original plan to put into production in 2015 has delayed many devices, and the dismal market situation in 2015 has made many projects to be put into production hesitant.

Although adipic acid has been in surplus for a few years, downstream polyurethane is also exhausted, but another product - PA66 is in a period of rapid development, and the demand for adipic acid still has room for growth, so there are still many projects launched in 2016 and beyond. It is expected that the production capacity of adipic acid in our country will reach 2.60 million tons/year in 2016. After the completion of the Shanghai INVISTA 200,000 tons/year PA66 plant in November 2015, the domestic PA66 production capacity will be expanded to more than 500,000 tons/year in 2016. The increase in the domestic production capacity of the downstream product PA66 salt will not only reduce the external dependence of our country PA66, but also appropriately alleviate the problem of excess adipic acid. In addition, from the perspective of import and export data, in 2015 our country's total exports of adipic acid was about 184,000 tons/year, an increase of 18.2%. Since 2012, our country has become an adipic acid exporter, and the export volume has increased year by year. It is expected that in the next few years, in the face of fierce competition in the domestic market, the export ratio of adipic acid in our country will continue to increase.

At this moment, with the conclusion of the two sessions, the issue of reducing production capacity and adjusting the structure of the chemical industry has become the focus again. The reform of the chemical industry has become urgent and will continue unswervingly in the next few years. This is a good opportunity for adipic acid to solve the problem of excess. If the policy is implemented, the production of adipic acid products will be better planned and concentrated. Combined with the rapid development of downstream products and the smooth export road, adipic acid will have a new style.