FocusAsia ACN to extend fall on deep-sea cargoes, weak demand

28 July 2010 06:07  [Source: ICIS news]

By Helen Yan

SINGAPORE (ICIS)--Asian acrylonitrile (ACN) prices are poised to fall further due to increased deep-sea supply coming from the US Gulf, at a time when demand is slackening, industry sources said on Wednesday.

ACN shed $280/tonne (€215.60/tonne) from late June to $2,000-2,050/tonne CFR (cost and freight) India in the week ending 23 July, according to ICIS.

Spot prices in India declined significantly, as traders with deep-sea US Gulf cargoes were seeking customers while demand was weak on the back of reductions in operating rates at a number of acrylic fibre (AF) producers, they said.

AF is the main downstream sector for ACN.

August spot offers for deep-sea cargoes fell below $2,000/tonne CFR India, according to downstream AF producers in India. But the material would only arrive early October, taking into account that US Gulf cargoes take about six weeks to reach Asia, they said.

“We have received spot offers at $1,980/tonne CFR India for August shipments, but we are in no hurry to purchase ACN as the acrylic fibre market is very weak,” said a downstream producer in India.

“The third quarter is usually a high demand season for AF makers, but it is not happening this year,” said an AF producer in India.

Acrylic fibres are used in clothing and home furnishings, such as carpets, upholstery, cushions and blankets.

Most AF facilities in India were either shut or operating at reduced capacities due to the poor market conditions, industry sources said. AF demand has waned as customers switched to polyester, which is a cheaper alternative, they said.

AF prices are currently at around $2.70-2.75/kg CFR Asia, ICIS data showed.

“We expect AF prices to drop further to below $2.60/kg,” said a producer in India.

“Offers for ACN above $2,000/tonne CFR India are not workable, as we need a spread of $600/tonne to post any margins,” he added.

But the Indian ACN market has a spot-driven nature and does not represent the broad Asian market, regional producers said.

“Prices tend to fall or rise faster in India, as it is primarily a spot market,” said a major ACN producer.

Still, the falling Indian ACN values would have an impact on prices in Asia, market players said.

Chinese traders were heard seeking to purchase August shipments of deep-sea ACN cargoes from the US Gulf at below $2,000/tonne CFR, they added.

Major ACN producers in Asia include Asahi Kasei Corp, China Petrochemical Development Corp (CPDC), Taekwang Industrial Co and Shanghai SECCO Petrochemical Co.

Acrylic fibre producers in Asia include Tong-Hwa Synthetic Fiber Co, Indian Acrylics Limited (IAL), Pasupathi Acrylon, Vardhman Acrylics, Thai Acrylic Fibre Co, Zhejiang Hangzhouwan Acrylic Fibres Co and Jilin JiMont Acrylic Fiber Co.

($1 = €0.77)

For more on acrylonitrile, visit ICIS chemical intelligence
To discuss issues facing the chemical industry, go to ICIS connect
Read John Richardson and Malini Hariharan’s Asian Chemical Connections blog

By: Helen Yan
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