FocusAsia ACN targets record $2,000/tonne in Q2

15 April 2008 05:01  [Source: ICIS news]

By Helen Yan

SINGAPORE (ICIS news)--Asian acrylonitrile (ACN) prices are poised to hit a record in the second quarter, boosted by  soaring propylene feedstock costs, tight supply and a weak US dollar, traders and producers said on Tuesday.

Spot offers for May cargoes have risen to $1,995/tonne CFR (cost and freight) Asia and traders and producers are confident that it will be a matter of time before prices touch $2,000/tonne.

“The US dollar is expected to further weaken against the yuan, which will mean higher US dollar prices, so it is quite possible to $2,000/tonne CFR Asia in the second quarter,” a trader said.

High crude prices, which climbed above $112/bbl recently, and lifted naphtha to around $930/tonne CFR Japan and propylene above $1,350/tonne CFR northeast (NE) Asia, have also helped to bolster the uptrend. 

Propylene feedstock prices have surged to a near 16-year high at $1,350-1,400/tonne CFR northeast (NE) Asia, according to global chemicals market intelligence service, ICIS pricing.

Major US producer, Ineos Nitriles, recently settled its April ACN contracts at $1,975/tonne CFR Asia, up $20/tonne from March due to soaring propylene feedstock costs.

“We have no choice but to increase our prices due to the huge costs pressures from the propylene feedstock price,” a company source said.

The US April chemical grade propylene contract was settled 3.5 cents/lb higher at 63.5 cents/lb, adding about $80/tonne to the ACN production costs.

A spate of ACN plant turnarounds in the second quarter has helped to bolster the prices.

Several major ACN producers, including Asahi Kasei, Tongsuh, Jilin and CPDC have scheduled to shut down their plants for maintenance in the second quarter.

“It is a seller’s market as supply is getting tighter while demand is picking up,” a Taiwanese producer said, adding that rising domestic prices in China are also adding upward pressure on US dollar transactions.

Domestic ACN prices in China have increased by about yuan (CNY) 500/tonne ($70/tonne) in the past month to around CNY 16,500/tonne delivered.

Chinese domestic ACN prices are expected to rise further in the second quarter as downstream acrylic fibre (AF) and acrylonitrile-butadiene-styrene (ABS) producers ramp up operating rates during the seasonal high production season.

The upcoming one-month maintenance shutdown of major Chinese producer, Jilin Petrochemical’s 212,000 tonne/year ACN plant in May, has helped to fuel the domestic price uptrend.

It has prompting traders and end-users to seek spot material in the international market in anticipation of higher prices.

 “We have received several enquiries from traders and end-users but we have no spot cargo available due to our contractual commitments and tight supply,” another producer said.

($1 = CNY7.00)

By: Helen Yan
+65 6780 4359

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