05 September 1994 00:00 [Source: ICB]
THE DEVASTATED cotton harvests in Pakistan and China have radically improved the fortunes of acrylonitrile producers worldwide as the textile industry steps up its demand for alternative fibres.
Acrylonitrile prices have risen steadily since the beginning of the year. Chinese acrylic fibre buying at the turn of the year began the price hikes with Far East acrylonitrile prices rising from $515/tonne CFR Taiwan in January to $540/tonne by the end of the quarter when difficulty chartering shipping space from the US to the Far East resulted in a run down in Far East inventories and pent-up demand.
As awareness of the cotton harvest problems increased, so the rate of hikes has accelerated. April saw Far East numbers at $585/tonne. Producers were initially looking for $625/tonne for May and $650/tonne for June but they have upped the asking price to $630/tonne and $675/tonne respectively.
As textile players are keen to secure Q3 quantities July numbers are expected to continue to climb and $700/tonne CFR Taiwan is now talked.
Europe is benefiting from Chinese fibre purchases and from a pick-up in east European fibre demand especially from Poland, the Czech Republic and Hungary. In Europe fibre plants at Montefibre, Courtaulds and Bayer are said to be running at full capacity.
European T1 prices, still around $600/tonne cif, could be set to rise. Problems at one of DuPont's adiponitrile units in the US is believed to have led to European supply arrangements.
A one-off tolling agreement has been struck with a European producer, sending DuPont into the spot market to secure around 12 000 tonne of acrylonitrile feedstock. This is believed to have virtually eliminated Russian material from the European marketplace and mopped up excess European material.
In any case spot material available in the European market could be profitably exported to the Far East where virtually all US export business is headed.
European producers are starting second quarter contract negotiations asking a $120/tonne rise over Q1's $1080-1220/tonne FD, with the lower number said to be that paid by the major textile producers.
They are arguing that this number reflects the DM20/tonne increase in propylene and the more significant increase in ammonia prices over the quarter which to some extent compensates for the price reduction given in the first quarter.
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