FocusChina’s acrylic acid, esters prices to fall after strong surge

06 December 2012 05:23  [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 Samuel Wong

SINGAPORE (ICIS)--Chinese domestic prices of acrylic acid (AA) and acrylate esters is poised to continue declining in the near term after a price surge following the explosion at Nippon Shokubai’s Himeji facility in end-September, sources said on Thursday.

The Japanese firm was ordered to suspend operations at all its facilities, including a 460,000 tonne/year acrylic acid and a 320,000 tonne/year unit for super absorbent polymer (SAP), in Himeji after the explosion.

Immediately after the incident, market participants had expected prices in Asia’s and China’s domestic markets to increase because of tight supply and limited availability of cargoes in the region.

Chinese domestic prices hit the ceiling on 31 October and started declining since, according to ICIS data.

Prices of butyl acrylate (butyl-A) on 5 December in the Chinese domestic markets decreased by yuan (CNY) 5,100-5,200/tonne ($817-835/tonne) to CNY12,800-13,200/tonne DEL (delivered) east China, compared with 31 October, ICIS data showed.

Glacial AA prices fell by CNY4,500-4,700/tonne to CNY12,200-12,800/tonne DEL east China in the same period.

“The price surge in the initial stage happened too fast, which caused panic in the market,” a Chinese distributor said.

Chinese domestic prices of glacial AA increased by CNY5,100-5,300/tonne, while butyl-A prices increased by CNY3,300-3,500/tonne on 31 October, compared with 26 September, according to ICIS data.

“Right now, buyers have ample inventories and are unwilling to purchase cargoes at such high levels,” the distributor added.

The initial price surge was largely attributed to local traders who were procuring cargoes on expectations that prices will remain on a firm uptrend and the likelihood of selling to the Japanese market for profit margins, market players said.

“However, there are certain barriers of entry into the Japanese markets, especially in regards to standard of quality of the products,” a southeast Asia-based trader said, without elaborating further.

Currently, Chinese domestic prices are likely to continue falling, as demand remains weak because of ample inventory levels, several market participants said.

Furthermore, end-users are keeping their inventory levels low as the year-end approaches, market participants added.

“The buyers in China are not interested in procuring imported cargoes right now, as they expect domestic prices to fall further,” a northeast Asia-based seller said.

($1 = CNY6.23)

By: Samuel Wong

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