Europe Q1 acrylic fibre demand up to 30% down year on year

08 March 2013 17:11  [Source: ICIS news]

By Mark Victory

LONDON (ICIS)--Several European acrylic fibre producers have estimated that first-quarter demand is up to 30% lower than in the same period last year because of poor macroeconomic conditions, they said on Friday.

“Q1 30% down year-on-year is more-or-less what I'm thinking,” an acrylic fibre producer confirmed.

The main cause of the fall in demand is negative general economic conditions, which have reduced consumer purchasing power. Nevertheless, other factors such as poor margins against ACN as well as volatile exchange rates are also limiting demand.

"I think it's a combination of factors. ACN pricing is far too high - fibre producers can’t pass on cost-prices. It's globally still a crisis. I think that also markets not doing fantastic,” an ACN trader said.

Acrylic fibre producers argue that acrylic fibre prices need to be at least $600/tonne (€456/tonne) above ACN spot prices. With acrylic fibre spot prices currently at around $2,500/tonne CIF (cost, insurance and freight) Europe, this would necessitate an ACN spot price of $1,900/tonne.

Nevertheless, ACN producers argue that their own feedstock costs demand a minimum ACN spot price of $2,000/tonne

Activity in the ACN spot market has been limited in recent weeks as a result of the divide between buyers and sellers.

Coupled with the gap in buy/sell side price targets, overseas buyers are unwilling to take deliveries - which typically have lead times of up to eight weeks to Asia - amid uncertainty over the true cost when material lands as a result of volatile exchange rates.

Although some sources said that they factor in exchange rate movements, and hedge against them, volatility has risen sharply in 2013.

Asia is an important export market for European ACN, and for finished goods such as automotives.

Traditionally, Europe ACN exports would rise following the end of the Lunar New Year holiday in Asia, as Asian players look to restock material. Nevertheless, players are yet to see a rise in exports so far in 2013.

Some producers argue that acrylic fibre demand is stronger than their expectations, and although lower than last year, the reduction is not as bad as claimed by some sources.

“Compared with previous years maybe it's not so good, I don't know but certainly the demand now is better than in the fourth quarter. For us the industry is going overall 90%, for the fibre industry - that's not a bad rate for that type of industry,” a producer said.

Fibre producers had previously confirmed that specialty and technical products are outperforming other applications.

($1 = €0.76)

By: Mark Victory
+44 208 652 3214

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