Chemical profile: acrylonitrile

Lower costs could spur exports

27 January 2009 15:20  [Source: ICB]

DEMAND

2007: 1.295m lbs (587 tonnes) 2008: 1.29m lbs 2012: 1.32m lbs, projected. Demand equals production plus imports (2007: 100,00 lbs 2008: 1.2m lbs) less exports (2007: 1.874m lbs 2008: 1.296m lbs). Source: ICIS Chemical Business United States Census Bureau (USCB) United States International Trade Commission (USITC)

GROWTH

Historical (2003-2008): -2.1 (negative)%/year. Future: 0.5%/year through 2012. Source: ICIS Chemical Business

PRICE

Historical (2003-2008): High, $1.16/lb, US Gulf, contract, delivered low, 32 cents/lb, same basis. Current: 37-42 cents/lb. Current spot pricing: 29-34 cents/lb, US Gulf, FOB (free on board) plant. Source: ICIS pricing

USES

Adiponitrile (ADN), 36% acrylonitrile butadiene styrene (ABS) and styrene acrylonitrile (SAN) resins, 34% acrylamide, 15% nitrile elastomers, 3% miscellaneous, including polymers, polyols, barrier resins and carbon fibers, 12%. Source: ICIS Chemical Business

MARKET PERSPECTIVE

ADN, accounting for 36% of demand, is used exclusively for production of hexamethylenediamine, which in turn is used primarily for nylon 6,6 fibers and resins. Consumption of nylon 6,6 had been growing at about 0.5%/year, but last year consumption declined with the economy. Some 75% of nylon 6,6 is used in textiles and industrial fibers, and the remaining 25% goes into resins consumed in automotive and consumer goods.

ABS/SAN resins take another 34% of ACN's consumption. ACN demand for ABS/SAN resins is sensitive to general economic conditions, as these resins are used primarily for durable goods. Most ABS/SAN resin markets are well penetrated, and substitution by less-expensive resins occurs in some applications. ABS/SAN resin exports have declined in recent years because of new production in Asia and Mexico. As a result, ACN growth for these resins is anticipated to be flat.

Acrylamide accounts for 15% of ACN demand. Most acrylamide is converted to polyacrylamides (PAMs), which are homopolymers of acrylamide or copolymers of acrylamide with a variety of other monomers. PAMs are nonionic but can be reacted with amines and carbonyl compounds to produce cationic materials. PAMs and their derivatives are used as primary flocculants or coagulant aids for various industrial processes and municipal water treatment. This segment has performed well and is expected to show 2.5% annual growth.

Expansion of acrylic fiber production in Asia has drastically affected US consumption of ACN for acrylic fibers. Increased imports of finished apparel from Asian countries reduced the need for domestically produced acrylic fibers for apparel.

Overseas production of acrylic fibers has been driving US exports of ACN. From 2003 through 2007 about 60% of the produced ACN was exported. During this time, the price of ACN increased dramatically, following increases in the cost of propylene and ammonia. The result has been a reduction in overseas acrylic fiber production and a drop of 578m lbs in exported ACN in 2008 - a decrease of more than 30% from 2007.

OUTLOOK

A reduction in the cost of propylene late in 2008 is already reflected in reduced ACN pricing. ACN contract pricing in the US was above $1/lb in late summer and early fall, but is now near 40 cents/lb. This should help the recovery of exported material as well as help ABS/SAN resins to resist substitution by other resins. Demand for ACN is projected to be 0.5%/year for the forecast period.

US ACRYLONITRILE CAPACITY, MILLIONS OF LBS/YEAR

Company	Location	Capacity
Cytec Industries	Westwego, Louisiana	500
DuPont	Beaumont, Texas	400
INEOS Nitriles	Green Lake, Texas	1,180
	Lima, Ohio	440
Solutia	Alvin, Texas	1,100
TOTAL		3,620

SOURCE: ICIS CHEMICAL BUSINESS

Over 90% of world ACN capacity is based on theSohio Acrylonitrile Process: ammoxidation of chemical-grade propylene.

UK energy giant BP formed Innovene as a separate entity in April 2004, which comprised BP's former olefins and derivatives businesses. The new entity included BP's ACN business, with production sites at Green Lake, Texas, and Lima, Ohio. INEOS acquired Innovene in October of 2005, and in February, 2006, created INEOS Nitriles, a subsidiary that includes the ACN business.

In October, 2005, Lucite took over responsibility for operating DuPont's ACN plant at Beaumont, Texas. The deal gave Lucite access to the plant's by-product hydrogen cyanide. DuPont retained responsibility for marketing the ACN.

In December, 2005 Sterling Chemicals announced it was exiting the ACN business and later dismantled its 740m lb/year ACN plant in Texas City, Texas. The plant had been idle since March, 2005.

Profile last published July 25, 2005

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