Adipic acid: high crude oil demand superimposed on sluggish market growth is limited

Affected by the intensification of the conflict between Russia and Ukraine, the oil price has risen sharply recently, and the downstream chemical market has also increased driven by strong costs. However, at present, the demand of the chemical market is still in the recovery stage, and the increase is much less than that of crude oil, as well as the adipic acid market. Under the background of strong supply and weak demand, the overall increase of adipic acid market may be limited in March.

In terms of cost, after negotiation and contact, the war between Russia and Ukraine shows no signs of easing, while Russia's energy exports have been substantially affected. The market is afraid of losing Russia's energy supply, and crude oil prices continue to rise sharply. Although the cost rises, the support is general compared with the current high adipic acid price.

In terms of supply and demand, after the Spring Festival, with the increase of the operating load of some factories, the overall operating rate of domestic adipic acid enterprises was around 67.8% in February. In addition, Huafeng phase V plant was started. The domestic adipic acid output was about 218000 tons in February, up 29.4% month on month compared with January. The factory started relatively stably in March. In terms of downstream demand, there are more downstream terminals after the spring festival than after the Lantern Festival. At present, the operating load of large factories in the slurry market has increased to around 60-80%, and the load of small factories is low; The average operation of sole stock solution is 50-60%, waiting for demand follow-up; PA66 market is weak and downstream procurement is weak; In terms of PBAT market commencement, it maintained about 30%, and the atmosphere of actual order transaction was general. Recently, it was boosted by the continuous sharp rise of crude oil, which stimulated some downstream to enter the market for replenishment, but the overall demand side recovered slowly, and the market demand was still insufficient after stage replenishment.

On the whole, under the background of high geopolitical risks, high crude oil prices superimposed on sluggish downstream demand, and the market is intertwined. At present, the profit of adipic acid is still relatively good. It is expected that the market will follow the rise of raw materials or be limited. In addition, considering whether the short-term surge caused by geopolitical conflict can be sustained, the market trading mentality is cautious. At present, the adipic acid price may stabilize and sort out, waiting for the substantive improvement of downstream demand.