Outlook for 2023

Cost side

Crude oil in 2023 is a year of relatively tight supply and demand. Institutions also generally predict that the oil price will hover around 100 US dollars  in 2023, which will bring benefits to the entire energy and chemical sector. The price of pure benzene, the raw material of adipic acid upstream, may remain relatively high. From the perspective of cost, adipic acid will be favorable.

Supply side

In 2022, the operating rate of adipic acid was generally low, with the annual average operating rate of less than 70% and the idle capacity of nearly 1 million tons. However, the capacity of adipic acid to be put into production in 2023 will also exceed 700,000 tons, which means that the situation of oversupply will be more serious in the future. The supply side will suppress the price of adipic acid, and also test the profitability of enterprises.

Demand side

2023 is the year that China's economy is expected to recover. Adipic acid demand is expected to grow faster than expected. According to the planning statistics, the main downstream of adipic acid PA66 and PBAT are expected to show significant growth. In particular, PA66 has a lot of new capacity, which needs to be released. Sinochem International is expected to expand its production capacity from 25,000 tons to 80,000 tons in 2023. Sanning Chemical also has a 200,000 ton PA66 project which is expected to be put into operation in October 2023. In addition, Longhua polymer material 320,000 tons PA66 project is also expected to be put into production by the end of 2023. The future demand prospect is predictable. At the same time, it will help adipic acid get out of the haze of loss.

In comprehensive consideration, adipic acid has cost advantages in the future. Both sides of supply and demand are intertwined with long and short factors. At the same time of oversupply, demand is also growing. In the future, the game between supply and demand will intensify, which will also increase the amplitude of adipic acid. It is expected that the main fluctuation range will be 9,000-12,500 RMB/ton.

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