Chemical Profile - Acrylonitrile

19 August 2002 00:00  [Source: ICB Americas]

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ACRYLONITRILE   August 19-26, 2002

PRODUCER	CAPACITY*
BP Chemicals, Green Lake, Tex.	1,000
BP Chemicals, Lima, Ohio	410
Cytec Industries, Avondale, La.	475
DuPont, Beaumont, Tex.	400
Solutia, Alvin, Tex.	1,100
Sterling Chemicals, Texas City, Tex.	750
Total	4,135

*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. Sterling Chemicals' 750 million pound-per-year acrylonitrile plant at Texas City, Tex., has been idled since February 2001 because of poor profitability. In May 2002, Sterling filed its organization plan under US bankruptcy proceedings, which called for the separation of its pulp business from its core petrochemicals business. Monsanto spun off its industrial chemicals operations as Solutia in 1997. 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. The plant's output is shared with Asahi and Bayer, both of which have equity in the facility. Amoco merged with British Petroleum to become BP Amoco in 1998. In July 2000, BP Amoco Chemicals reverted to the name BP Chemicals after BP Amoco decided to adopt a new unified global brand, centered on the name BP. The new name embraces British Petroleum, Amoco, Arco and Burmah Castrol, all acquired by BP. Profile last published 5/8/00; this revision 8/19-26/02.

DEMAND
2000: 1.69 billion pounds; 2001: 1.68 billion pounds; 2005: 1.8 billion pounds. Demand equals production plus imports, which were 17 million pounds in 2000 and 5 million pounds in 2001, less exports, which were 1.505 billion pounds in 2000 and 1.574 billion pounds in 2001.

GROWTH
Historical (1996-2001): negative 0.4 percent per year; Future: 1.8 percent per year through 2005.

PRICE
Historical (1996-2001): High, 53 cents per pound, list, tanks, works; low, 53 cents, same basis. Current: 53 cents same basis. Current spot pricing is 31 cents to 33 cents, same basis.

USES

Acylonitrile's uses

Adiponitrile, 38 percent; ABS/SAN (acrylonitrile-butadiene-styrene/styrene acrylonitrile) resins, 22 percent; acrylic fibers, 17 percent; acrylamide, 11 percent; nitrile elastomers, 3 percent; miscellaneous, including polymers, polyols, barrier resins and carbon fibers, 9 percent.

STRENGTH
Adiponitrile, acrylonitrile's largest application sector, is used exclusively for production of hexamethylenediamine, which in turn is used primarily for nylon 6/6 resins and fibers. Nylon has experienced robust growth over the past decade and is projected to continue growing at 3.5 percent in the next several years, supporting demand for acrylonitrile. The export market for acrylonitrile continues to be driven by strong demand from Asia. In addition, a shortfall of propylene feedstock in Asia last winter forced several acrylonitrile plants to curtail production, aiding US exports. Even with the soft economy, the supply-side situation has tightened this year. All three units at Solutia's 1.1 billion pound-per-year acrylonitrile plant at Alvin, Tex., were down for turnaround maintenance. Sterling Chemicals' 750 million pound-per-year acrylonitrile plant at Texas City, Tex., has been idled since February 2001 for economic reasons.

WEAKNESS
The acrylonitrile business is heavily dependent on exports. From 1990 until the end of 1997, exports were more than 1 billion pounds per year, serving a rapidly growing acrylic fiber and styrenics industry in the Far East. In 1997, about 1.5 billion pounds of acrylonitrile were exported, roughly equivalent to domestic consumption. When that fell off at the end of 1997 and through 1998 and much of 1999, operating rates went down in the US by about 15 percent, and suddenly there was overcapacity based solely on a declining export market. For the past couple of years, exports have again grown to more than 1.5 billion pounds. But because most of the anticipated new acrylonitrile capacity will be built in Asia, the export market is at risk long term.

OUTLOOK
Asia has recovering from the financial difficulties that disrupted acrylonitrile exports, beginning in 1997, and exports are back up where they were previously. New acrylonitrile capacity is being constructed and planned for the region, and this will eventually displace material exported from the US. This year the market for acrylonitrile has tightened as several plants were down in the spring and Sterling's Texas City plant has been idled since February of 2001 and will probably not be restarted before the end of this year. Future demand through 2005 is projected at 1.8 percent annually.

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