Adipic Acid Market Analysis

Adipic Acid Market (Global, 2024)

Introduction

Adipic acid is used in the manufacture of a variety of products and has become an essential constituent in the manufacture of artificial silk and other synthetic fibers. This organic compound, obtained largely from petroleum, is a basic constituent of the polyamides, the fabrics, the automobiles, the daily articles, the ropes, and the cords. Adipic acid is a very important chemical and is used in a wide variety of industries, but the increasing emphasis on the reduction of the carbon foot-print has increased the demand for adipic acid substitutes, which has led to innovation and investment in green chemistry. Also, the raw material price and regulatory scenario are expected to influence the market in the near future. It is essential for the adipic acid market players to understand these factors to gain a better understanding of the market and to take advantage of the opportunities.

PESTLE Analysis

Political

The market for adipic acid in 2024 is affected by various political factors, such as government regulations on the chemical industry. The European Union has adopted strict regulations under the REACH framework that requires the registration of more than 30,000 chemicals, including adipic acid. In the chemical industry, this has led to an increase in the cost of compliance, and the cost of compliance for each substance is estimated to be over one million. In addition, trade policies and tariffs between the United States and China have also influenced the import and export of adipic acid. The United States imposed a tariff of 25 percent on the import of some chemicals.

Economic

The economy of the adipic acid market in 2024 will be shaped by the fluctuating prices of raw materials and the general state of the world economy. In the last year, the price of cyclohexane, the main raw material for the production of adipic acid, has increased by about 15%, mainly due to supply problems and the rising price of crude oil. However, the post-pandemic economic recovery has increased the demand for adipic acid in the car and textile industries, where it is used in the production of polyamide. In 2024, the demand for adipic acid in the car industry alone is expected to be around 1.5 million tons, which is mainly due to the increase in the number of cars produced.

Social

The social trends of 2024, which favour products which are comparatively ecological, are having a considerable influence on the market for adipic acid. People are becoming more aware of the harmful effects of chemicals, and the demand for bio-based alternatives is growing. A survey showed that about seventy per cent of consumers were prepared to pay a premium for products made from sustainable raw materials. The manufacturers are responding to this change by looking at methods of producing adipic acid which are based on vegetable matter and which, compared with the conventional method, might reduce the carbon dioxide emissions by as much as fifty per cent. In addition, the increasing popularity of the circular economy is influencing companies to adopt more sustainable practices in their production.

Technological

In the adipic acid market in 2024, technological developments play an important role, especially in terms of production efficiency and environmental protection. Catalytic processes have made it possible to reduce the energy consumption of adipic acid synthesis by about 20 per cent. Also, the use of digital technologies, such as the Internet of Things and artificial intelligence, improves the process efficiency and reduces the number of accidents. The companies are increasingly investing in R & D, and in the chemical industry, for example, this year, it is estimated that about $200 million will be spent on the development of more environmentally friendly production methods.

Legal

Legal factors affecting the adipic acid market in 2024 include the stricter regulations on environment and health. The United States EPA has issued new guidelines requiring adipic acid manufacturers to report emissions of nitrous oxide, a by-product of adipic acid production, above a threshold of 10 tons per year. This could lead to a fine of more than 50,000 U.S. dollars per day for noncompliance. The implementation of the CFATS will also require adipic acid producers to take certain security measures, which will further increase the cost of production and the compliance burden for manufacturers.

Environmental

In 2024, the environment will become an ever-greater consideration in the adipic acid market, with a focus on reducing the carbon footprint of production. The adipic acid industry accounts for approximately 2% of global greenhouse gas emissions, primarily through the release of nitrous oxide. In order to reduce this figure, companies are investing in carbon capture technology. Some estimate that these measures could reduce greenhouse gas emissions by as much as 30%. Moreover, increasing regulation is driving companies towards greater consideration of the environment, with nearly 40% of the industry’s players committing to achieve zero-emissions status by 2030.

Porter's Five Forces

Threat of New Entrants

The market for adipic acid has a medium-level barrier to entry due to the capital-intensiveness of the production process and the need for special equipment. But new entrants can still find opportunities in niche applications or in regions with lower competition. But the strict regulatory requirements and the need for economies of scale deter many potential entrants.

Bargaining Power of Suppliers

The bargaining power of the suppliers in the adipic-acid market is relatively low. There are a large number of suppliers of raw materials, such as cyclohexane, which enables the price to be kept low. Suppliers can also be easily changed without incurring any significant costs.

Bargaining Power of Buyers

The buyers of adipic acid have high bargaining power because of the large number of suppliers and the relatively standardised nature of the product. The manufacturers of polymers such as Nylon and polypropylene are able to negotiate better prices and terms and thus put the producers under pressure to maintain a competitive price and quality.

Threat of Substitutes

Threats of substitutes for adipic acid are of moderate magnitude. Although adipic acid has substitutes that are used in the production of nylon, its unique properties make it difficult to completely replace. Nevertheless, technological progress and the development of bio-based alternatives may in the future increase this threat.

Competitive Rivalry

Competition in the adipic acid market is high, because of the presence of several key players and the relatively low growth of the market. Price, quality and innovation competition is intense, resulting in aggressive marketing strategies and continuous process improvements. The high degree of competition can affect the profit margins and market shares of the companies.

SWOT Analysis

Strengths

• High demand in the production of nylon and other synthetic fibers.
• Established supply chain and production processes.
• Strong growth in the automotive and construction industries driving demand.

Weaknesses

• Environmental concerns related to production processes.
• Volatility in raw material prices affecting profitability.
• Limited diversification in product applications.

Opportunities

• Growing demand for bio-based adipic acid as a sustainable alternative.
• Expansion into emerging markets with increasing industrialization.
• Technological advancements in production methods to reduce costs.

Threats

• Regulatory pressures regarding emissions and environmental impact.
• Intense competition from alternative materials and substitutes.
• Economic downturns affecting overall industrial demand.

Summary

Adipic acid market in 2024 is characterized by a strong demand from key industries such as automobile and construction, and a strong supply in the form of established production capabilities. However, this market is under threat from the stringent regulations and the volatility of raw materials. Opportunities for this market lie in the sustainable production and expansion into emerging economies. Competition from substitutes is a significant threat. For the companies operating in this market, strategic focus on innovation and sustainable development is important.