Adipic acid is the most widely used dicarboxylic acid for industrial applications and is mainly used for the production of nylon for composite materials which are further used for manufacturing automobile components. Other applications of adipic acid include paints and coatings, plastic additives, polyurethane resins, low temperature lubricants, food additives and synthetic fibers. Adipic acid has been traditionally produced using various petroleum derived products including phenol, cyclohexane and benzene. However, shift in hydrocarbons market have eliminated phenol as a feedstock for producing adipic acid, with cyclohexane being primarily used as replacement. Cyclohexane processes have accounted for over 90% of total adipic acid produced globally over the last three years. Growing demand for nylon fiber and nylon resins from major end use industries such as automotive and footwear is expected to remain a key factor driving the global market over the next six years. In addition, the growth of automobile and footwear industries mainly in BRIC (Brazil, Russia, India and China) nations is expected to fuel the demand for adipic acid over the forecast period. However, volatility in raw material prices coupled with stringent regulations mainly in the U.S. and Europe owing to growing environmental concerns is expected to hinder the market growth over the next six years.
Owing to the growing concerns regarding the environmental impact of adipic acid, the industry has been gradually shifting its focus towards developing bio-based adipic acid. Bio-based alternatives for producing adipic acid not only provide an environmental friendly solution but also provide cost competitiveness against their synthetic (petroleum based adipic acid) counterparts. Bio-based adipic acid is produced using glucose as a basic feedstock which is environmental friendly in nature. In addition, bio-based adipic acid provides high value product, at a smaller scale, with lower capital investment required. Capital required for producing bio-based adipic acid is approximately 20% low compared to petroleum based adipic acid production. Furthermore, production of bio-based adipic acid also holds the advantage of 15% lower utilities cost and 30% lower manufacturing cost compared to petroleum based adipic acid which in turn helps is minimizing its overall variable cost, manufacturing cost and depreciation leading to reduced capital expenditure (CAPEX) and operation expenditure (OPEX). Companies involved in manufacturing bio-based adipic acid have also been benefiting from government support across various nations in the form of price subsidies, green mandates and loan guarantees which are further expected to boost the market for bio-based adipic acid.
Key application markets analyzed and reported in this study include nylon 6,6 fiber, nylon 6,6 resin, polyurethane and adipate esters among some other applications. Majority of adipic acid produced is used for manufacturing nylon 6,6 both in fiber and resin form. Together nylon 6,6 fiber and nylon 6,6 resin accounted for 83.3% of total adipic acid consumed in 2012. Nylon is used for a variety of application across various end use industries such as automotive and electronics. High purity grade adipic acid is used for manufacturing nylon, while lower purity grade adipic acid is used for manufacturing polyurethane. Polyurethane emerged as the next largest application of adipic acid and accounted for over 7% of total market volume consumed in 2013. Polyurethane is also expected to be fastest growing application market for adipic acid at an estimated CAGR of 5.4% from 2014 to 2020. The global demand for adipic acid for manufacturing adipate esters is expected to reach USD 193.8 million by 2020, growing at a CAGR of 5.4% from 2014 to 2020.
Global adipic acid market volume share by application, 2012
Asia Pacific dominated adipic acid consumption and accounted for over 35% of total market volume consumed in 2013. Along with being the largest market, Asia Pacific is also expected to be the fastest growing market for adipic acid at an estimated CAGR of 5.3% from 2014 to 2020. Growth of major end use industries including automotive, electronics and footwear in China and India is expected to remain a key driving factor for the regional market. On the other hand, the U.S. and Europe are fairly mature markets for adipic acid and are expected to grow at a relatively sluggish rate over the next six years. The North American and European markets are highly regulated markets and are largely driven by technology and innovation, especially in the renewable space. Europe emerged as the second largest market for adipic acid and accounted for 27% of total market volume consumed in 2012. Europe was closely followed by North America which accounted for 24% of total market volume for the same year. RoW market for adipic acid is largely driven by the growth of automobile industry mainly in Brazil and Argentina. Demand for adipic acid in RoW is expected to reach 530 kilo tons by 2020, growing at a CAGR of 4.9% from 2014 to 2020.
Global market for adipic acid is highly concentrated as top four manufacturers including INVISTA, Rhodia, Ascend Performance Materials and BASF accounted for over 60% of the total adipic acid production in 2012. Some other companies operating in the global market for adipic acid include Shangdong Haili (Bohui), Liyoyang Petrochemical, Asahi Kasei and Radici among some other companies. In a quest to develop bio-based alternative to synthetic adipic acid, Rennovia became the pioneer company to develop bio-based adipic acid using chemo-catalytic process. The global market for bio-based adipic acid has already crossed its feasibility stage and is currently in its development stage. Bio-based adipic acid is expected to be used for almost all the application segments for which currently synthetic adipic acid is being used, which creates an open opportunity for bio-based adipic acid producers to replace synthetic adipic acid market. Other major companies like DSM, Genomatica and Bio-Amber are expected to enter the bio-based adipic acid market over the next few years.