07 November 2012 03:46 [Source: ICIS news]
By Helen Yan
SINGAPORE (ICIS)--Asia’s acrylonitrile (ACN) producers are cutting output on hopes of stemming the continuous decline in values of their product amid an influx of deep-sea cargoes, which are competitively priced, industry sources said on Wednesday.
Surplus stocks from Europe and the US have been heading into Asia even though demand in this region has stayed weak, they said.
ACN prices have declined by about $150/tonne (€117/tonne) or 8% in a month’s time to $1,650-1,750/tonne CFR (cost and freight) northeast (NE) Asia on 2 November, according to ICIS data.
Currently, traders are trying to clear their stocks by offloading cargoes at reduced prices, market sources said.
“We are getting offers from traders with Asian, European and US material below $1,650/tonne CFR Asia,” a downstream acrylic fibre (AF) producer said.
“The last deal done into India was $1,650/tonne CFR India, and we expect prices to fall lower to $1,500/tonne CFR India,” an AF producer in India said.
Among the regional ACN makers that cut production – via plant shutdowns or cuts in run rates – in a bid to support prices at current levels include China’s Jilin Petrochemical, Japan’s Asahi Kasei, South Korea’s Taekwang Petrochemical and Taiwan’s China Petrochemical Development Corp (CPDC).
“Our margins have fallen into negative territory and we have no choice but to further cut the operating rate or shut down the plant if prices drop further,” an Asian ACN producer said.
Another Asian supplier said: “We expect demand to remain weak and prices to remain flat till the end of the year.”
Taekwang Petrochemical will consider further cutting production at its 290,000 tonne/year plant in Ulsan, South Korea, to 80% from mid-November from 90% currently.
CDPC, meanwhile, has brought forward by a week a planned turnaround of its ACN facility in Taiwan, said a company source. Its two ACN lines with a combined capacity of 240,000 tonnes/year were shut down over the weekend (3-4 November), ahead of the original schedule on 10 November, the source said.
Asahi Kasei, on the other hand, decided to extend the shutdown of its 150,000 tonne/year line at Kawasaki, Japan, by another week to mid-November. The plant was shut for maintenance in early October.
Its 200,000 tonne/year line at Mizushima will continue to run at 70% of capacity in November. The line has been running at this reduced rate since October.
($1 = €0.78)
Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections
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