FocusAsia ACN may extend falls in June; rebound likely in July

21 May 2012 05:02  [Source: ICIS news]

By Helen Yan

Acrylic fibres are used to make winter apparel, carpets and household furnishings.SINGAPORE (ICIS)--Acrylonitrile (ACN) prices in Asia are likely to fall further next month on poor demand, but values may rebound in July, when production ramps up at downstream acrylic fibre (AF) and acrylonitrile-butadiene-styrene (ABS) sectors, industry sources said on Monday.

Current ACN offers are at around $1,900/tonne (€1,482/tonne) CFR (cost and freight) northeast (NE) Asia, but buyers are seeking much lower numbers amid an increasingly bearish market sentiment, they said.

In the week ended 18 May, ACN spot prices were assessed at $1,850-1,900/tonne CFR NE Asia, down by $475/tonne from early April, according to ICIS.

The 20% slump was largely attributed to the sharp decline in demand, as AF and ABS makers in the region have either shut their plants or cut production.

ACN prices are also under pressure from declines in upstream product prices, with current US crude at below $92/bbl, naphtha at around $880/tonne CFR Japan, and feedstock propylene quoted at lower than $1,300/tonne CFR NE (northeast) Asia, industry sources said.

Traders with stocks in hand have been offloading cargoes at competitive rates on fears that ACN prices will continue falling amid heightened market concerns over the eurozone crisis.

“Traders with deep-sea cargoes are prepared to offload at $1,700/tonne CFR China for June shipments and we are looking to buy at $1,650/tonne CFR China,” a Chinese distributor said.

In India, a downstream AF producer said that traders are quoting $1,700/tonne CFR India for ACN.

“We are looking at $1,650/tonne CFR India for June shipments,” the AF maker said.

However, several ACN producers are considering further cutting operating rates at their facilities if their margins get eroded.

“We believe that prices will bottom out at $1,800/tonne CFR NE Asia and will rebound when the derivative AF and ABS makers return to the market to replenish their stocks in the second half of June,” a South Korean ACN producer said.

ACN demand traditionally peaks in the months of July to September as the derivative AF and ABS makers usually ramp up production so that they can ship out their finished products ahead of the Christmas holiday season, industry sources said.

The derivative AF is used to make winter apparel, carpets and household furnishings while ABS is the raw material for a wide range of products including toys, household appliances, office equipment and automotive components.

Demand for ACN has significantly weakened over the past months as several downstream AF and ABS plants in China, Taiwan and South Korea are either shut for maintenance or running at reduced rates.

Among the AF makers that shut their plants for maintenance are China’s Hangzhou Bay Acrylic Fiber, Jilin Qifeng Chemical Fibre, Jilin Jimont Acrylic Fibre and Daqing Petrochemical.

ABS makers such as South Korea’s Kumho Petrochemical and Taiwan’s Chi Mei, on the other hand, have cut their operating rates.

Weak downstream demand prompted a number of ACN producers to also cut production.

Taiwan’s China Petrochemical Development Corporation (CPDC) plans to continue running its 240,000 tonne/year ACN plant at a reduced rate in June.

“We will continue to run our plant at 85% of capacity in June and will consider shutting down our plant if [ACN] prices drop below $1,900/tonne as our margins will fall into negative territory,” said a company source.

Japan’s Asahi Kasei is currently running its 200,000 tonne/year ACN plant at Mizushima at 80% of capacity.

Meanwhile, PTT Asahi Chemical’s 200,000 tonne/year ACN plant in Map Ta Phut, Thailand, has been shut for a month now. The plant is currently undergoing quality checks to ensure every unit down the supply chain "is in good order" before the company can restart the plant, said a market source.

($1 = €0.78)

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

By: Helen Yan
+65 6780 4359

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