FocusUS ACN offers creep closer to Asia prices

16 May 2008 22:24  [Source: ICIS news]

By Ben LeFebvre

HOUSTON (ICIS news)--US acrylonitrile (ACN) market prices could be moving closer to comparatively high Asian prices for the material, market sources said on Friday.

A US producer was said to offer ACN at $2,070/tonne CFR (cost and freight), an overshoot in excess of $60/tonne beyond the current assessed price and closer to the higher “China price” for the chemical.

Market sources could not confirm whether the producer found a buyer, but the 4% increase over previous offer levels points to US producers’ drive to match the pricing found in Asia, industry sources said.

“It’s the China price,” a market source said. “It’s a tough market right now.”

US ACN export prices have risen consistently higher during the past few months, reaching $1,890-1,910/tonne FOB (free on board) on 9 May, according to global chemical market intelligence service ICIS pricing.

Meanwhile, Asian ACN prices reached $2,040/tonne CFR on Tuesday and were expected to rise further amid escalating energy and feedstock propylene costs.

US producers said rate hikes are necessary to combat a steady advance in the cost of production, where prices for ammonia, propylene and crude oil have all been climbing for months.

Downstream buyers for the acrylic fibre and acrylonitrile-butadiene-styrene (ABS) markets had resisted rising ACN prices for a while, saying demand had not caught up to what had been ACN’s abundant supply.

But growing acrylamide (AM) demand in China and recent ACN plant turnarounds, both planned and unplanned, have cut global ACN production by as much as 20% and tightened supply considerably and opened the door for price hikes, sources said.

The next question is how buyers can sustain shrinking margins, industry sources said.

Businesses in China and Taiwan that depend on ACN have cut back production or, in a few cases, closed completely due to higher prices. Latin American buyers saying the same may happen in their region.

“Demand remains slow to flat, and the fibre market is not accepting any increase, however small,” one buyer in Latin America said. “Our customers in Mexico and South America are being very cautious.”

US ACN producers include Ineos, Cytec, Lucite and Solutia.

($1 = €0.65)

For more on ACN visit ICIS chemical intelligence
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By: Ben Lefebvre
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