09 January 2006 10:44 [Source: ICIS news]
SINGAPORE (ICIS news)--The ongoing stand-off between buyers and sellers over contract negotiations has continued in the Asian acrylonitrile (ACN) market, with the buy-sell price gap widening to more than $200/tonne this week, producers and traders said on Monday.
The January contract settlement is likely to be a long-drawn affair in view of the stiffening resistance of buyers to the January nominations proposed by major ACN producers, they added.
Notional bids have dipped to $1,200/tonne against offers at $1,420/tonne CFR Asia by ?xml:namespace>
Asahi Kasei recently announced that it will stop ACN production at its smaller 100,000 tonne/year at Mizushima for two months from early January to manufacture methyl acrylonitrile (MAN) instead. The temporary stoppage will precede a 35-40 day scheduled turnaround from March at the larger 200,000 tonne/year line at Mizushima.
However, derivative acrylic fibre (AF) producers said that the severe erosion in margins has made it untenable for them to settle above $1,200/tonne CFR Asia.
“A spread of $600/tonne is needed and with acrylic fibre prevailing at $1,750-1,780/tonne CFR Asia, our margins have been wiped out,” said an AF producer.
Indeed, Chinese AF producers have cut ACN imports in recent months due to the persistently weak AF prices. Chinese AF producers slashed ACN imports by more than half to around 19,000 tonne in October over September. Although there was a slight improvement in imports to 24,000 tonne in November, this was primarily due to a new AF plant starting up in
“The AF market has been facing very difficult conditions due to the poor textile segment. For the spread between ACN and AF to improve, we expect ACN prices to go below $1,200/tonne CFR Asia for January shipments,” said another AF producer.
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