11 August 2008 21:11 [Source: ICIS news]
HOUSTON (ICIS news)--Weak demand in domestic and foreign markets could lead to a further drop in US acrylonitrile (ACN) production during the remainder of the year, sources said on Monday.
The National Petrochemical & Refiners Association (NPRA) released data on Friday showing first-half 2008 ACN production was 58.3m tonnes, down by 10% from 64.8m tonnes for the same period in 2007.
Second-quarter 2008 production was 28.9m tonnes, down by 8% from 31.5m tonnes in the second quarter of 2007, NPRA said.
The production drop was due to doldrums in the important acrylonitrile-butadiene-styrene (ABS) and fibre-weaving markets.
“Acrylo’s weak, ABS plastics are weak and fibre is not strong. There may be a light at the end of the tunnel, but we just can’t see it yet,” one analyst said.
However, while economic troubles for the first half of the year were largely confined to the US market, sales in the export markets - which account for about 50% of demand for US produced ACN - have slowed dramatically, making the outlook for second-half 2008 look particularly grim, sources said.
Shrinking profit margins, exacerbated by skyrocketing feedstock costs, led INEOS, the largest US ACN producer, to cut production rates by 40% in July. Producers Cytec Industries and Solutia followed soon after, cutting their production by about 20% each.
“It’s going to get worse. Demand so far shows no sign of returning,” a distributor said.
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