Initial Europe July ACN contract settles at a rollover

12 July 2013 23:59  [Source: ICIS news]

LONDON (ICIS)--An initial European acrylonitrile (ACN) July contract price has been agreed at a rollover compared with June, in spite of raw material cost reductions, the buyer and seller involved said on Friday.

Although the upstream propylene contract price was settled at a rollover compared with June, the cost of ACN's other feedstock, ammonia, has dropped since the beginning of June. FOB Yuzhny spot prices fell by $55/tonne (€42/tonne) from the 7 June-5 July.

Producers said the rollover was a result of decreases beyond feedstock cost falls being passed to the market earlier in the year because of weak demand being clawed back, coupled with tighter supply and strengthening demand from the downstream acrylonitrile-butadiene-styrene (ABS) sector.

“I think over the last month, we've gradually given away a little more than cost in general - especially for acrylic fibre. In July some of the settlements were such that a rollover was necessary,” the producer involved in the settlement said.

Tight supply follows on from production problems at INEOS Nitrile's 280,000 tonne/year ACN plant in Seal Sands, the UK, in late June. Although the plant is operating at normal rates, inventory levels remain low, a company source confirmed.

Nevertheless, participants in the European ABS market are still in talks over July domestic prices, with rollovers to reductions of up to €40/tonne heard from buyers and sellers.

An extrusion grade producer is only offering rollovers because of tightness in the market caused by possible technical problems at a second producer's facility. The producer was not contactable for comment at the time of writing.

Some general purpose grade buyers believe lower prices could be achieved next week as producers look to sell volumes ahead of the holiday period lull in demand.

A second ACN buyer said that it had settled its July contract prices at a reduction of €5/tonne, but this could not be confirmed on the sell-side. Buyers argue that demand remains weak - particularly from the acrylic fibre sector - and that the market remains long despite recent production outages globally.

Negotiations with the second producer involved in contract negotiations were ongoing.

Initial European July ACN contract prices settled at a pre-discounted level of €1,975-1,990/tonne FD (free delivered) NWE (northwest Europe).

Additional reporting by Matt Tudball

($1 = €0.76)

By: Mark Victory
+44 208 652 3214

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