Acrylonitrile

01 August 2005 00:01  [Source: ICB Americas]

Producer Capacity*

Cytec Industries, Avondale, La.	475
DuPont, Beaumont, Tex.	400
Innovene, Green Lake, Tex.	1,000
Innovene, Lima, Ohio	410
Solutia, Alvin, Tex.	1,100
Sterling Chemicals, Texas City, Tex.	(idle 740)
Total operating	3,385

*Millions of pounds per year of acrylonitrile. Over 90 percent of world acrylonitrile capacity is based on the Sohio process: ammoxidation of chemical-grade propylene.

BP formed Innovene as a separate entity in April 2004, which comprises BP’s former olefins and derivatives businesses. BP also announced its intention to divest the new company in the second half of 2005, possibly through an initial public offering, depending on market conditions and necessary approvals.

In March, Sterling Chemicals idled its 740 million pound-per-year acrylonitrile plant at Texas City, Tex., citing a shortage of feedstock propylene. The company had earlier idled the plant in February 2001 after declaring Chapter 11 bankruptcy amid poor market conditions. Sterling restarted the plant in July 2003 when it emerged from Chapter 11, even though market conditions were still relatively poor. Sterling is currently considering two options: eventually restarting to operate with two of its three reactors, or exiting the acrylonitrile business if propylene remains scarce.

In late 2000, Solutia brought a new 550 million pound-per-year plant on stream in Alvin, Tex., raising the site’s nameplate capacity to more than 1 billion pounds.

Profile last published 8/19/02; this revision 8/1/05.

 

DEMAND

2003: 1,435 million pounds; 2004: 1,620 million pounds; 2008: 1,610 million pounds, projected. Demand equals production plus imports (2003: 5 million pounds; 2004: 2 million pounds) less exports (2003: 1,950 million pounds; 2004: 2,018 million pounds).

GROWTH

Historical (1998–2004): -0.4 (negative) percent per year; future: -0.7 (negative) percent per year through 2008

PRICE

Historical (1998–2004): High, $0.63 per pound, aver. cont., tanks, del.; low, $0.24, same basis. Current: $0.48 to $0.51 same basis. Current spot pricing is $0.53 per pound.

USES

Adiponitrile, 33 percent; acrylonitrile butadiene styrene and styrene acrylonitrile (ABS and SAN) resins, 33 percent; acrylamide, 12 percent; acrylic fibers, 10 percent; nitrile elastomers, 3 percent; miscellaneous, including polymers, polyols, barrier resins and carbon fibers, 9 percent.

MARKET PERSPECTIVE

Increasing propylene prices and shortages have hurt the acrylonitrile business in the last several months. In the past, propylene has been a by-product of ethylene produced from steam cracking of liquid feedstocks such as naphtha and from fluid catalytic cracking (FCC) units producing gasoline at oil refineries. The remainder of propylene is produced using on-purpose technologies such as propane dehydrogenation.?Propylene prices have been pushed up by increasing energy prices. Additionally, propylene demand growth has consistently outpaced ethylene demand growth, and investments in steam crackers have not been able to keep pace with the rising propylene demand. Likewise, because propylene demand growth is consistently higher than gasoline demand, investments in refinery-sourced propylene are not keeping up with propylene demand growth. The result has been high prices and short supply.?While propylene has gotten tight and more expensive, exported acrylonitrile has seen its export spot price decline by 8 percent from $1,200 per metric ton in January to $1,100 earlier this month. This has severely squeezed margins, as 56 percent of the acrylonitrile produced is exported.?ABS/SAN resins account for 33 percent of acrylonitrile consumption. Acrylonitrile demand for ABS/SAN resins is sensitive to general economic conditions, as these resins are used primarily for durable goods. Most ABS/SAN resin markets are well penetrated and substitution by less expensive resins occurs in some applications. ABS/SAN resins exports are expected to decline because substantial new production capacity has been established in Asia as well as Mexico. As a result, acrylonitrile demand growth is anticipated to be flat over the forecast period.?Adiponitrile, is used exclusively for production of hexamethylenediamine, which is used primarily for nylon 6,6, which should grow by 1.2 percent annually through 2008.?Acrylamide accounts for 12 percent of acrylonitrile demand. Most acrylamide is converted to polyacrylamides (PAMs). PAMs and derivatives are used as primary flocculants or coagulant aids for industrial processes and municipal water treatment and conditioning. This segment is performing well and may grow 4 percent annually.?Expansion of acrylic fiber production in Asia has drastically affected US consumption for acrylic fibers. Solutia, the last manufacturer of acrylic fibers in the US, quit the business in April, and this acrylonitrile market segment, which consumed 10 percent of demand in 2004, has disappeared.

OUTLOOK

Producers will continue to be challenged by tight propylene supply. Several are researching routes to acrylonitrile based on propane, but no commercial plant has been announced. The export market is at risk because of high raw material costs and new overseas capacity. Demand is stagnant or declining in most of the major application segments, except acrylamide. Over the forecast period, demand in the US is projected to decline by 0.7 percent per year.

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