16 January 2009 16:00 [Source: ICIS news]
LONDON (ICIS news)--There is growing acceptance that acrylonitrile (ACN) contracts in Europe will temporarily settle on a monthly basis for January, instead of quarterly, given the lack of agreement in first quarter propylene prices and market volatility, market participants said on Friday.
Propylene values in Europe for January were agreed at €430/tonne ($566/tonne) FD (free delivered) NWE (northwest ?xml:namespace>
ACN buyers reported offers for January down €680-710/tonne from fourth quarter prices, reflecting prices around €1,240/tonne FD NWE.
The fourth quarter 2008 contract price of ACN was assessed at €1920-1930/tonne FD NWE by global chemical market intelligence service ICIS pricing.
Producers acknowledged that a price drop of around €640/tonne would reflect the drop in raw material costs.
Generally, they thought that buyers’ requests of a €800/tonne drop was excessive, given that producers were running at lower rates which had pushed the fixed cost of making one tonne of ACN proportionately higher.
Buyers acknowledged this, but said that producer margins were still too much. Producers agreed that the raw material cash costs of producing a tonne of ACN were around €670/tonne in
Talks were generally at an early stage and further price discovery was expected next week, sources added.
Not all suppliers had agreed to monthly contract pricing, however, and one buyer said that a producer had ruled itself out of supplying on a contract basis, preferring to sell spot tonnage.
($1 = €0.76)
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