19 April 2013 15:47 [Source: ICIS news]
By Mark Victory
LONDON (ICIS)--Montefibre Hispania is preparing to halt production at its 95,000 tonne/year acrylic fibre plant in Miranda De Ebro “imminently” following its filing for ‘preconcursado’ protection on Tuesday 16 April, parent company Montefibre has confirmed.
Montefibre Group said in a statement made in Italian on 16 April and shown to ICIS on Friday, that Montefibre Hispania will temporarily suspend production at Miranda De Ebro because of a lack of working capital.
According to local media in Spain – including El Correo – production will be suspended on either 23 or 24 April. Montefibre Hispania refused to comment on the situation and Montefibre Group was unable to immediately confirm.
Acrylic fibre is a key downstream industry for the European acrylonitrile (ACN) market, and is the major consumer of ACN spot material.
The majority of European ACN sources said that the Montefibre Hispania outage will not have a significant impact on the overall supply/demand balance. This is because acrylic fibre end-use demand is weak and buyers and sellers of ACN predict that the lost capacity will be quickly absorbed by other acrylic fibre producers.
“It doesn't change the consumption of the end-product, just who will make it. On the very short-term [it] might have an impact. But won't fundamentally change anything,” an ACN producer said.
Nevertheless, they added that the outage may have a psychological impact in a market where sentiment is already bearish because of poor macroeconomic conditions.
Some players also speculated that the outage may lead to an increase in exports out of Europe as sellers seek to place the lost volumes with other acrylic fibre players.
“Europe is now changing again to clearly export driven - acrylonitrile suppliers are nervous as to where to put the material,” and ACN buyer said.
It was suggested by one producer that Egypt will be a likely destination.
“[I] Don't think it will have a major impact on overall supply and demand balance. I think it will not be a big impact; of course there will be a psychological impact. It's not a huge amount of material. It will go to Egypt,” the producer said.
Acrylic fibre demand in the first quarter of 2013 has been estimated by market players at 30% below the same period in 2012.
Under Spanish insolvency law, a 'preconcursado' agreement is a protection measure for companies at risk of insolvency. The agreement, made on Tuesday 16 April, will protect Montefibre Hispania for four months to allow it time to renegotiate its finances with its creditors and avoid insolvency, the mayor of Miranda De Ebro, Fernando Campo, said in a statement on Wednesday this week.
A source at parent company Montefibre Group said prior to the filing that the Miranda De Ebro plant has enough working capital to remain operational until the end of this month, but production beyond that would have to be suspended until it could raise additional capital.
There has been speculation in the past week in both Europe and the US that Montefibre Group may permanently exit the acrylic fibre market. Nevertheless, the Montefibre group source previously said that the potential suspension of production concerns only Montefibre Hispania and not Montefibre Group.
Montefibre Hispania is a wholly-owned subsidiary of Montefibre Group.
Montefibre Group and General Electric have injected €7.5m ($9.74m) of capital into Montefibre Hispania, but this has not been enough to cover its debts, according to the mayor.
The mayor went on to criticise five financial institutions as responsible for delaying the refinancing of Montefibre Hispania, which has resulted in the 'preconcursado' protection being necessary.
The mayor added that it has written to the five institutions – which he named as Banco Bilbao Vizcaya, Banco Popular, Caixa Banc, Banco Sabadell and the Institut Catala de Finances (ICF) – urging them to support the company.
“Montefibre does not want to close [the plant]. It wants to ensure that it continues [to operate] and that ...the 362 employees that depend on [Montefibre Hispania] keep their jobs,” the mayor said in Spanish.
The mayor further argued that Montefibre Hispania is a viable business and needs financial help, and that the mayor’s office was as invested as Montefibre Group and the Montefibre Hispania employees in keeping the business operational.
($1 = €0.77)
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