31 January 1994 00:00 [Source: ICB]
FAR EAST acrylonitrile prices fell significantly towards the end of last year with 'panic selling' seeing final quarter contract numbers effectively being revised down late in the quarter, the climax to a bad year for US acrylonitrile producers who, with the loss of European markets, have relied substantially on Far East export activity.
Prices which started Q4 at $550/tonne cif Southeast Asian port were said to have sunk as low as $510/tonne by the end of the quarter. Realistically, the proposed $30/tonne Q1 1994 hike is only likely to move prices back to those agreed at the beginning of Q4 and with discussions likely to be prolonged, US players must fear they are facing a repeat of H1 1993.
Surprisingly, after bullish noises in Q4, European acrylonitrile producers appear resigned to a contract roll-over in Q1, in spite of both producers and buyers agreeing that the market is currently well balanced. One player suggested that price hikes could attract renewed competition from US material.
There may have been some low-priced spot T1 sales in Europe late in Q4 but players reckoned that it was material for which traders had no ready market and had decided that storage would be uneconomic. BASF has had production problems which have seen two reactors down for a portion of January losing 3000 tonne/year of production. Production problems are also rumoured at Repsol.
The major reason given for roll-over by producers is that downstream customers could not cope with hikes and yet acrylic fibre players claim the jury is still out on how successful acrylic fibre price hikes, announced in late November last year, have been.
Commodity fibre producers are said to be having most difficulty in raising prices. Producers were looking for an 8-9% price increase from 1 January following the substantial pickup in Chinese purchasing in the final quarter of last year which ran down European fibre inventory levels.
With some of the Q4 purchases still being delivered in Q1, fibre players are optimistic that Chinese purchasing will continue in 1994.
Q1 acrylic fibre price hikes in the Far East market have been partially achieved with Korean sellers achieving a $1.35/kg price with China, up 5 cent/kg on Q4, but so far no reported agreement between China and Japanese producers, asking a 7-8 cent increase on Q4's 1.32/kg price or with the Italian producers who also want a significant hike from Q4's low $1.25/tonne levels.
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