14 July 2009 04:57 [Source: ICIS news]
By Helen Yan
SINGAPORE (ICIS news)--Asia acrylonitrile (ACN) producers will implement steeper production cuts as their margins have been severely eroded by the soaring costs of feedstock propylene, market sources said on Tuesday.
Major Japanese ACN producer Asahi Kasei and Taiwanese ACN producer China Petrochemical Development Corp (CPDC) said the surge in costs of feedstock propylene had eroded their margins, leaving them no choice but to further slash operating rates by another 10-20% as soon as possible.
The feedstock propylene has soared to $1,000-1,045/tonne (€720-752/tonne) CFR (cost and freight) NE (northeast) Asia, up $150/tonne in the past month, according to global chemical markets intelligence service ICIS pricing.
In contrast, ACN prices had only started to edge up to $1,180-1,230/tonne CFR NE Asia last week after languishing at $1,150-1,200/tonne CFR NE Asia for the past two months since early May.
“We will cut the operating rates of our ACN plants further by another 10-15% as soon as possible if our margins continue to be eroded by the high feedstock propylene costs,” a company source at Asahi Kasei said.
Asahi’s ACN plants in ?xml:namespace>
The same sentiment was echoed by Taiwanese ACN producer CPDC.
“We have no choice but to further cut the operating rate of our ACN plant by another 10-20% or our margins will be wiped out,” a company source at CPDC said.
CPDC is running its 190,000 tonne/year ACN plant at
However, a South Korean ACN producer, Taekwang Industrial, said it would monitor the market conditions before deciding whether to cut operating rates. It is currently running its 250,000 tonne/year ACN plant at
“It depends on the market conditions. We are running 100% now, but may cut the operating rate in September if market conditions deteriorate,” a company source said.
Apart from deeper production cuts, Asian ACN producers have also increased offers by $50-100/tonne to $1,300-1,350/tonne CFR Asia.
Although demand from the derivative acrylic fibre (AF) is expected to remain strong into the third quarter, ACN producers said they anticipate stiff resistance to the proposed price hikes.
“At the moment, we are facing strong resistance from the AF makers to offers above $1,300/tonne CFR Asia, but we have no choice but to keep our offers at this minimum level due to the feedstock cost push factor,” a South Korean ACN producer said.
($1 = €0.72)
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