FocusAsia ACN to fall further on softening demand, fresh supply

25 May 2011 05:32  [Source: ICIS news]

Acrylic fibres - a major downstream market for ACN - are used in clothing and home furnishings such as carpets, upholstery and cushions.By Helen Yan

SINGAPORE (ICIS)--Acrylonitrile (ACN) prices in Asia are set to fall further as demand has weakened from downstream acrylic fibre (AF) sector, and with additional supply expected to hit the market in July, industry sources said on Wednesday.

ACN spot prices have fallen by $100/tonne (€71/tonne) since early May to $2,650-2,750/tonne CFR (cost and freight) NE (northeast) Asia in the week ending 20 May, according to ICIS data.

ACN spot prices were on an uptrend since August 2010 until mid-May this year, when a number of AF producers have cut operating rates or shut down production in China given extreme softness in demand.

AF - used in clothing and home furnishings such as carpets, upholstery and cushions -accounts for more than half of Asia’s ACN consumption.

“We expect ACN prices to continue to fall further as demand has dropped significantly in China and sentiment has turned bearish,” a Chinese trader said.

Buying indications from Chinese traders this week have plunged to $2,400/tonne CFR NE Asia for June shipments, down from previous bids of $2,600/tonne CFR NE Asia in early May, in line with sharp falls in ACN values in the domestic Chinese market.

Chinese domestic ACN prices tumbled to yuan (CNY) 19,000/tonne EXWH (ex-warehouse) this week, down by CNY2,000/tonne ($307/tonne) since the end of April, according to traders.

AF plants in China, including Daqing Petrochemical, Qilu Petrochemical, Fushun Petrochemical, Jilin Qifeng Chemical Fiber and Jilin JiMont Acrylic Fiber have either cut production or shut down their plants.

In response to the weak demand, major Chinese ACN producer Jilin Petrochemical has brought forward a planned turnaround of its three ACN lines to June from July, a company source said. The lines have a combined capacity of 332,000 tonnes/year.

Meanwhile, ACN supply is expected to ease when PTT Asahi Chemical starts commercial production at its new 200,000 tonne/year ACN plant in Thailand in July.

The plant is currently on trial runs, with commercial production likely to commence in July, said a company source.

“We expect ACN supply to ease soon and we are not looking to buy spot,” said a downstream AF producer.

($1 = €0.71 / $1 = CNY6.50)

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections

By: Helen Yan
+65 6780 4359

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