12 April 2013 09:52 [Source: ICB]
Asia's acrylonitrile (ACN) prices fell by 8.7% on average in March thanks to weak demand and increasing supply, with the market set to remain bearish in the near term, industry sources said.
Asian ACN prices fell to $1,750-1,900/tonne (€1,365-1,482/tonne) CFR northeast (NE) Asia in the week ended 29 March, from $1,950-2,050/tonne CFR NE Asia in early March, ICIS data showed.
ACN prices went on a downtrend at the beginning of March after rising for only one week following China's Lunar New Year holiday on 9-15 February.
Many market participants attributed the price fall to the weaker-than-expected demand after the festive holiday and the increasing supply in the region.
Demand from the downstream acrylic fibre (AF) sector remained lacklustre because of lower polyester prices, while consumption from the downstream acrylonitrile-butadiene-styrene (ABS) market was equally slow as a result of the weaker automotive industry.
In China, automobile sales in February totalled 1.35m units, a decrease of 13.6% from the same period a year ago and 33.4% from the previous month, data from the China Association of Automobile Manufacturers (CAAM) showed.
The country's vehicle production for February fell by 16.3% year on year and 31.4% month on month to 1.35m units.
ABS prices in northeast Asia fell by 5% from early March to $1,890-1,940/tonne CFR NE Asia on 29 March, ICIS data showed.
The increase in regional supply has also dampened buying sentiment, with many end-users not in a hurry to build up their inventory given the cargo availability and slow consumption, market sources said. South Korea's Tongsuh Petrochemical started up its new 245,000 tonne/year ACN plant in Ulsan in the second half of February.
China's Sinopec Anqing Petrochemical is operating its new 130,000 tonne/year ACN plant in Anhui province at 70-75% capacity after bringing it on stream in late January.
However, many producers are mulling over a possible reduction in plant operating rates as their port margins are being squeezed, sources said.
In China's domestic market, prices fell by yuan (CNY) 700/tonne ($113/tonne) to CNY12,900-13,100/tonne ex-tank in the week ended 29 March on the back of weak buying sentiment. End-users had retreated to the sidelines, because of the uncertain outlook.
Looking forward, market participants remain pessimistic about the near-term forecast, because of the weak downstream demand and supply glut amid the weak global economy.
"I think this year's second quarter will be similar to last year's; prices will be under pressure," an AF producer said.
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