FocusWeak demand weighs on Asia ACN; tight supply supports market

05 March 2013 06:21  [Source: ICIS news]

By Judith Wang

Weak demand weighs on Asia ACN; tight supply supports marketSINGAPORE (ICIS)--Asia’s acrylonitrile (ACN) prices are under pressure to weaken because of poor downstream demand and soft feedstock values, but the market is currently being buoyed by tight supply, industry sources said on Tuesday.

Spot prices were assessed at $1,950-2,050/tonne (€1,502-1,579/tonne) CFR (cost and freight) NE (northeast) Asia on 1 March, unchanged from the previous week, while values of feedstock propylene declined by $20-30/tonne to $1,360-1,420/tonne CFR NE Asia, according to ICIS.

ACN has piled up 9.6% of gains since the start of the year, but has stayed mostly at an average of $1,940/tonne in February, backed by tight supply, the data showed.

Prices increased by an average of $60/tonne to $2,000/tonne CFR NE Asia in the week ended 22 February, immediately following the Lunar New Year holiday in the key China market but demand could not sustain the upward momentum, with feedstock propylene exerting downward pressure on the market.

Spot propylene prices started to weaken after hitting $1,390-1,440/tonne CFR NE Asia on 22 February, ICIS data showed.

“It is impossible for ACN prices to increase further if there is no demand support,” a trader said.

Most end-users have built enough ACN inventory before China’s week-long  Lunar New Year holiday in February.

Demand from the downstream acrylic fibre (AF) and acrylonitrile-butadiene-styrene (ABS) sectors failed to pick up significantly, market sources said.

AF, which is a major downstream sector for ACN, has applications in apparel and home furnishing, as well as in other industrial end-uses.

“We increased our AF prices accordingly because of high ACN prices, but our downstream did not accept it [higher prices], citing slow consumption,” an AF producer said.

Demand for ABS has been lacklustre since the end of the third quarter last year because of weak demand from the US and eurozone for Asian-made products.

Most market players now expect little improvement in demand for the first half of the year, contrary to an earlier optimism about a rebound in March.

Asia's ACN supply, on the other hand, is still tight as major regional producers are not running their plants at full capacity amid poor margins, industry sources said.

In Japan, Asahi Kasei is running its 150,000 tonne/year plant in Kawasaki at around 70% of capacity, and its 200,000 tonne/year unit in Mizushima at a slightly higher rate of about 80%. In Taiwan, meanwhile, China Petrochemical Development Corp (CPDC) is running its 240,000 tonne/year ACN plant in Kaohsiung at 90% of capacity.

($1 = €0.77)

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

By: Judith Wang
+65 6780 4359

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