Cost Boost Limited; Adipic Acid Prices Continue to Decline in April

April 24th News

According to SpotCom data: In April, the price of adipic acid continued to decline, with the market trend consistently falling. On April 1st, the average market price of adipic acid in China was 10,833 CNY per ton, and by April 24th, the average market price of adipic acid in China had dropped to 9,533 CNY per ton, a decrease of 12%.

Main Factors Affecting the Adipic Acid Market Fluctuations in April in China

Cost Side: Geopolitical conflicts in the Middle East have persisted, causing crude oil prices to surge initially before retreating. While prices remain volatile at high levels, their marginal strength is waning. The upward boost from crude oil has become limited, and prices of pure benzene and cyclohexanone have gradually declined, weakening their cost-supporting effect.

Supply Side: As maintenance periods come to an end, supply pressure increases significantly. At the beginning of the month, the industry's operating rate is 60%-70% (with multiple plants under maintenance). By mid to late month, as maintenance ends, the operating rate rises to 75%-80%, leading to an increase in spot supply.

Inventory: At the beginning of the month, inventory levels were low, and there was a clear reluctance to sell; by the end of the month, inventory had accumulated, and manufacturers' willingness to sell increased, with more promotions at lower prices.

Demand Side: Demand remains weak, with poor transmission. Traditional downstream sectors such as pulp, shoe sole raw liquid, PA66, and TPU have an operating rate of less than 50%, with flat orders and low acceptance of high-priced adipic acid. The imbalance in transmission, characterized by a "strong upstream and weak downstream," has squeezed the profits of the midstream, leading to cautious purchasing.

Market Sentiment: At the beginning of the month, there was a strong bullish sentiment, with sellers holding back to push prices up. After mid-month, demand weakened and costs fell, leading to a shift in sentiment to bearish, with active selling and light trading.

Technical Level Forecast

According to SpotCom data, the price trend chart of adipic acid shows that key indicators : after the 10-day moving average crossed above the 20-day moving average in early April, it has already shown a downward cross by mid-April. By the end of April, the probability of a price decline for adipic acid remains high. Entering May, the adipic acid market in China will still be in a high-level fluctuation, with a trend of fluctuating downward.

Auxiliary Indicator: At the beginning of April, adipic acid prices hit lows on the 10th and again on the 20th, exhibiting oversold conditions over both 20-day and 30-day periods. This to some extent confirms the trend of high-level fluctuations and downward oscillations in adipic acid prices throughout May.

In summary: The forecast from the supply and demand perspective indicates that cost support is minimal, supply is ample, and demand is declining, leading to a significant downward trend for adipic acid in May. From a technical standpoint, it can be observed that the market for adipic acid in May will continue to weaken, with limited room for further decline. Therefore, the overall trend for adipic acid in May will be a fluctuating decline, with prices expected to range between 8,500 CNY/ton and 9,300 CNY/ton.

Adipic acid market analysts believe: In May, the cost support will weaken, and the supply pressure will double. The adipic acid market in China may continue to decline.