13 May 2008 05:51 [Source: ICIS news]
By Helen Yan
SINGAPORE (ICIS news)--Asian acrylonitrile (ACN) prices are likely to firm further after hitting a historical high of $2,040/tonne CFR (cost and freight) northeast (NE) Asia, despite growing resistance from the buyers, traders and producers said on Tuesday.
NYMEX crude has surpassed $126/bbl, lifting naphtha to more than $1,000/tonne CFR Japan, while propylene prices have climbed above $1,450/tonne CFR NE Asia.
“We have no choice but to increase our offers as our margins have been squeezed by the high naphtha and feedstock propylene costs,” a major ACN producer said.
Feedstock propylene values have risen by about $100/tonne in the past month to $1,450-1,480/tonne. In the ?xml:namespace>
Major Japanese ACN producer, Asahi Kasei, has hiked its May contract nomination to $2,060/tonne CFR Asia, up $40/tonne from April contract nomination.
A weak US dollar, tight ACN supply in
Domestic ACN prices have surged by more than yuan (CNY) 1,000/tonne ($140/tonne) since March to around CNY 17,000/tonne ex-tank as traders snapped up cargoes prior to the Labour Day holidays in early May.
Chinese traders had expected prices to increase in May, given the one-month shutdown of local producer, Jilin Petrochemical’s 212,000 tonne/year ACN plant in May.
Demand from the derivative acrylamide (AM) sector has also increased in
“The AM sector is growing and doing very well and they can afford to pay more than $2,040/tonne,” a Japanese trader said, adding that he has increased his offers to $2,060/tonne.
However, there is mounting resistance from the other downstream acrylic fibre (AF) and acrylonitrile-butadiene-styrene (ABS) producers, with some threatening to further slash operating rates or shut down operations, if they have not already done so.
“We will cut down the operating rate by 50% as our margins are being wiped out by the high raw material costs,” a major Taiwanese ABS producer said.
A Chinese AF producer, Qinghuangdao Acrylic Fibre, has shut down its 50,000 tonne/year plant earlier this month due to poor margins.
“Our margins are being badly squeezed by the high raw material ACN costs and weak AF prices,” a company source said, adding that the plant would most likely be closed for about a month.
Several Chinese AF producers, including Ningbo Rayon, Zhejiang Jinyong and JiMont Fibre, have been operating at 20%-60% of capacity in the past few months due to squeezed margins from high ACN prices and a weak AF market.
($1 = CNY6.99)
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