Europe ACN bullish on feedstock problems and Asian strength

02 March 2012 17:47  [Source: ICIS news]

LONDON (ICIS)-- There were no deals heard in the European acrylonitrile (ACN) spot market this week, but recent propylene difficulties and high prices in Asia have created a bullish sentiment.

INEOS is running on very low ACN inventories at its 300,000 tonne/year plant in Cologne after declaring force majeure on propylene supplies at the German site after a superheater leak forced the No.4 cracker to shut down two weeks ago.

The Switzerland-headquartered producer has managed to acquire some propylene from alternative sources on the spot market but March production will be a lot less than planned, a company source said.

In addition, Shell Chemicals declared force majeure on 1 March for all cracker products with immediate effect, because of an unforeseen increase in fouling in its ethylene cracker system at Moerdijk in the Netherlands.

The timeframe for the repairs is still being assessed, with a clearer view expected by mid-March. Shell Chemical has a nameplate capacity at its Moerdijk cracker of 500,000 tonnes/year for propylene.

ACN customers said that despite the possibility of tightened availability in March, their supplies have not been affected so far and they will be able to survive even if INEOS has difficulty delivering all contracted output.

One trader said bids at $2,400/tonne (€1,800) CIF (cost, insurance & freight) Mediterranean (MED) are being heard but this was dismissed as far too high by buyers.

Customers said that while the trend for prices is definitely upwards it is not moving anywhere near as fast as that. Instead, one consumer said prices are around $2,150/tonne CIF MED but could reach $2,200/tonne in a couple of weeks.

One producer and one trader already assess the spot range at $2,150–2,200/tonne CIF MED, although neither has done any deals at these levels yet.

Another producer said that considering the problems currently experienced with propylene and high prices in Asia, it will not accept any bids below $2,200/tonne CIF WE (western Europe).

Asian offers have now reached $2,300/tonne CFR (cost & freight) – up by $100-150/tonne from February – because of ongoing and upcoming plant shutdowns.

However, several Asian players warn that a surge in ACN values above $2,400/tonne in March would only prompt downstream acrylic fibres manufacturers to cut operating rates.

European spot prices are pegged at $2,150–2,200/tonne CIF WE – up by $70–90/tonne from last week – after the upstream March propylene contract rose by €90/tonne ($120/tonne).

($1 = €0.75)

By: Amandeep Parmar
+44 208 652 3214

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