FocusAsia ACN producers target India, Middle East as China slows

23 June 2009 04:22  [Source: ICIS news]

By Helen Yan

SINGAPORE (ICIS news)--Asian acrylonitrile (ACN) producers will continue to target India and the Middle East as Chinese demand slumps due to an influx of deep-sea cargoes there, traders and producers said on Tuesday.

“The tanks are overflowing and we have enough ACN supply to last until the end of July, so we are not importing any cargo from the Asian producers,” a Chinese trader said.

Chinese traders had capitalised on the opening of the arbitrage window from the US Gulf to Asia in recent months, when ACN prices in the US Gulf were much lower than Asian prices.

As a result, they had procured large quantities of lower-cost, deep-sea ACN material from the US Gulf. About 10,000 to 15,000 tonnes of deep-sea material from the US Gulf had been arriving in China every month in the second quarter, traders and producers said.

The slump in Chinese demand had prompted the Japanese, Taiwanese and Korean ACN producers to target other markets such as India, Iran and Turkey.

“Although demand in China has slowed down, demand from other countries is still very strong. We have received several enquiries from India, Iran and Turkey for cargoes,” a northeast Asian producer said.

“The Chinese market is not buying at the moment as they have too much supply but demand from India, Turkey and Iran is very good and we can sell above $1,200/tonne easily,” a Japanese trader said.

Asian ACN producers have been seeking prices above $1,200/tonne(€864/tonne) CFR (cost and freight) Asia but Chinese buying indications for imports had dipped below $1,100/tonne CFR, weighed down by the weak domestic ACN prices in China.

Domestic ACN prices in China have dropped to yuan (CNY) 8,900-9,000/tonne ($1,301-1316/tonne) ex-tank, down about CNY 500/tonne from mid-May as Chinese traders offloaded cargoes below CNY 9,000/tonne ex-tank from overflowing tanks at the Lianyunggang port in east China.

On the other hand, trades into India and the Middle East had picked up and had been sealed at $1,200-1,250/tonne CFR by Asian producers.

“We expect demand from India and the Middle East to remain strong as the third quarter is traditionally the high production season for the downstream acrylic fibre (AF) makers,” the Japanese trader said.

($1 = €0.72/ $1 = CNY6.84)

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By: Helen Yan
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