FocusAsia ACN prices set to rise in February on supply crunch

19 January 2010 03:45  [Source: ICIS news]

By Helen Yan

SINGAPORE (ICIS news)--Asian acrylonitrile (ACN) prices are poised to rise to $2,000/tonne (€1,380/tonne) in February because of  a supply crunch, strong Chinese demand and rising costs of the feedstock propylene, traders said on Tuesday.

February spot offers surged to $2,000-2,100/tonne CFR (cost and freight) Asia, up more than $200/tonne from mid-December prices, as supply was constrained by a spate of plant turnarounds in Asia and outages in Europe.

ACN is a raw material used in the production of acrylic fibre (AF) and acrylonitrile-butadiene-styrene (ABS).

Several ACN plants in Asia, including Japan’s Asahi Kasei, South Korea’s Taekwang Industrial and Taiwan’s China Petrochemical Development Corp (CPDC), have limited spot availability due to a heavy turnaround schedule in the first four months of this year.

“We have no spot availability in the first quarter, as we are building up our inventories ahead of our plant turnaround in February,” a company source at Taekwang Industrial said.

Taekwang’s 250,000 tonne/year ACN plant at Ulsan, South Korea, will be shut for maintenance for three weeks from 20 February until 10 March, while Japan’s Asahi Kasei will shut its 300,000 tonne/year plant at Mizushima from early March to mid-April for maintenance.

Taiwanese producer CPDC will have its 190,000 tonne/year ACN plant at Kaohsiung, Taiwan, undergo turnaround in early April.

In Europe, a cracker outage in Cologne, Germany, in December led major petrochemical producer INEOS Olefins and Polymers to declare force majeure on ACN supplies at its 300,000 tonne/year plant at the site last week.

Recent production issues at Lukoil’s 150,000 tonne/year ACN facility at Saratov, Russia, and at INEOS’s 230,000 tonne/year ACN plant at Sealsands, in the UK, further curtailed supply in Europe.

Adding fuel to the supply crunch is the robust Chinese market, which has seen domestic ACN prices rise to yuan (CNY) 17,000-17,500/tonne ($2,489-2,562/tonne), up CNY 2,000/tonne since mid-December, as Chinese traders stock up on inventories ahead of the Lunar New Year holidays in mid-February.

Financial markets and many businesses in China will be closed for the Lunar New Year festivities.

“We have received many enquiries from Chinese traders for late-February and early-March delivery, but we have limited spot availability,” a company source at Taiwan’s CPDC said.

Apart from Asia, Chinese traders also source from the US and Latin America.

More than 15,000 tonnes of deep-sea ACN product from the US, Mexico and Brazil is expected to head towards China in January and February, but fresh deep-sea cargoes are likely to command higher prices, given the rising feedstock propylene costs.

US January contracts for chemical-grade propylene settled 3 cents/lb higher at 55.50 cents/lb, which will add more than $70/tonne to the ACN production cost.

“It is getting more difficult to secure deep-sea cargoes as supply is tight and feedstock propylene costs are pushing up prices. We will be happy if we could secure ACN at $1,900/tonne CFR China,” a Chinese trader said.

($1 = €0.69/$1 = CNY6.83)

For more on acrylonitrile visit ICIS chemical intelligence
Read John Richardson and Malini Hariharan’s Asian Chemical Connections blog
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By: Helen Yan
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