08 March 2013 23:59 [Source: ICIS news]
LONDON (ICIS)--European acrylonitrile (ACN) spot offers have fallen $20/tonne (€15/tonne) from last week because of weak demand, and in spite of feedstock propylene cost increases, sources said on Friday.
ACN producers were targeting prices of $2,050/tonne CIF (cost, insurance and freight) W (western) Europe last week because of the rise in the March propylene contract price, and their need to restore margins.
Nevertheless, poor margins in the acrylic fibre market and weak demand have caused producers to lower their offers.
The lowest priced offers, which were being made at around $1,950/tonne CIF W Europe, were from eastern European suppliers, several sources said.
Bids remain in the low $1,900s/tonne because of poor downstream margins and weak demand. Automotive consumption in 2013 to date is around 15% below the same period in 2012, according to market estimates.
Several European acrylic fibre producers have estimated that first-quarter 2013 demand is up to 30% below first-quarter 2012 levels because of poor macroeconomic conditions, they said.
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 and volatile exchange rates are also limiting demand.
Acrylic fibre producers said acrylic fibre prices need to be at least $600/tonne above ACN spot prices. With acrylic fibre spot prices currently at around $2,500/tonne CIF Europe, this would necessitate an ACN spot price of $1,900/tonne.
The gap between sell-side and buy-side ACN spot price targets continues to limit spot activity.
Acrylamide and carbon fibre demand remains strong because of structural growth, but consumption from these sectors has not been strong enough to counterbalance low buying interest in other downstream industries.($1 = €0.77)
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