AA back to weakness under demand and falling exports

After a brief improvement in supply and demand in June, adipic acid (short as AA) market slipped back into a weak supply-demand pattern with the restart of plants by Shenma and Hualu. The overcapacity issue that has long plagued nylon 66 industrial chain continued to weigh on the performance of AA market. Since July, AA price has fallen only slightly from 7,050yuan/mt to 6,900yuan/mt, a drop of 150yuan. However, the processing margin shrank by nearly 230yuan/mt, increasing operating pressure on AA plants.

On the supply side, firstly, due to the booming market for ammonium sulfate (a by-product of CPL) in mid-to-late June, CPL processing margin expanded by nearly 800yuan/mt in the short term, calculated based on the 1:1.6 by-product ratio of CPL to ammonium sulfate. This stimulated Hualu to operate its CPL plant at full capacity and restart a cyclohexanone plant simultaneously. To match cyclohexanone consumption, its 50kt/year AA plant was also restarted. Originally, Hualu's AA inventory had been accumulating slightly, but with further increases in supply and no significant improvement in downstream demand, inventory accumulation accelerated. Current estimated inventory may have exceeded 10,000 tons. However, as AA storage conditions are relatively lenient, there was insufficient destocking pressure in short, and enterprises had little willingness to cut prices proactively.

On the other hand, a large number of export orders had supported Huafon in maintaining high operating rates, but poor export performance in June exerted some impact on the market. In June 2025, AA exports stood at 30,368 tons, plunging nearly 50% month-on-month to hit the lowest level of the year, while the average export price also dropped to $933.18/mt, another annual low. This decline was affected by multiple factors: first, the global market entered the traditional off-season, with weakened terminal demand, and inventory backlogs or slower procurement may have occurred in Southeast Asian, European, and American markets; second, export volumes in April-May were relatively high, with some demand released in advance, leading to a natural decline in the June base. Overall, the export decline in June mainly reflected seasonal adjustments and the concentrated release of price pressures, and attention should be paid to whether a new recovery cycle will start subsequently.

In addition, some engineering plastics enterprises reported that their demand for nylon 66-related products in August weakened significantly, and they are expected to reduce procurement volume of nylon 66 chips, thereby inhibiting rigid demand consumption of AA. Although Tangshan Zhonghao's 40kt/year nylon 66 chip plant has been put into operation, the overall supply of the nylon 66 market currently still closely follows demand trends, meaning that newly added capacity has limited impact on the overall supply-demand pattern. It is expected that AA demand will decline further in August, and the market's supply-demand imbalance will intensify.