Chemical Profile: Asia acrylonitrile

17 January 2014 09:40  [Source: ICB]

USES

Acrylonitrile (ACN) is used in acrylic fibers (AF), acrylonitrile-butadiene-styrene (ABS), styrene-acrylonitrile (SAN), adiponitrile (ADN), acrylamide and nitrile rubber copolymers.

SUPPLY/DEMAND

Asia’s ACN capacity rose to around 3.8m tonnes/year by the end of 2013 after China’s Anqing Petrochemical started up its 130,000 tonne/year plant in end January and South Korea’s Tongsuh Petrochemical started up its 245,000 tonne/year plant in February.

Asia ACN
Asia ACN
Most ACN plants in Asia were running at operating rates of 70-80% because of weak demand from ABS and AF sectors amid the economic slowdown in 2013.

Meanwhile, major suppliers faced squeezed margins from the second half of 2013 given the high feedstock propylene cost, which forced some plants to shut down or reduce operating rates due to economic issues.

On the import side, China is still the largest importer in Asia, which imported 496,466 tonnes of AN in the first 11 months of 2013.

The influx of deep-sea cargoes from the US, South America and Europe continued to move to Asia in the past year, which weighed on Asian prices to an extent.

On the demand side, ABS and AF also experienced a tough year, and average operating rates of ABS and AF plants in China were around 60% and 80% respectively. Most end-users also had to either shut down plants or reduce operating rates when they realised that they could not pass on costs to customers.

PRICES

Asia ACN prices rose to $1,950-2,050/tonne CFR NE Asia by March from $1,800-1,850/tonne CFR NE Asia at the beginning of the year on the back of rising propylene prices and plant shutdowns in Q1.

However, prices started to drop from mid-March after the start-up of new plants in China and South Korea. And for the rest of the year, prices were under pressure and below $2,000/tonne CFR NE Asia amid weak demand.

From last December, soaring propylene costs and reduced deep-sea cargoes from the US pushed up ACN prices to $1,850-1,900/tonne by early January.

Asia propylene prices rose to $1,495-1,515/tonne CFR NE Asia in early January.

Propylene prices in Asia are expected to be supported by a spate of cracker turnarounds in Japan. Six Japanese facilities will shut between February and June this year, compared to three in 2013. As a result, major suppliers in Asia had no choice but to raise prices to recoup margins and some offers for deep-sea cargoes and Asian cargoes were heard at around $1,950/tonne CFR NE Asia or above.

Most end-users showed strong resistance, citing that they could not pass on high feedstock costs to their downstream customers based on the prevailing ACN cost, which may force them to mull production cuts to reduce losses.

TECHNOLOGY

The dominant process for ACN production remains propylene ammoxidation, despite attempts to push propane ammoxidation as a feasible alternative.

The former – in which propylene, ammonia and air are reacted in a fluidized bed reactor – remains the most cost-effective method of manufacturing ACN, market sources said.

PTT Asahi Chemical – a joint venture between Thailand’s PTT and Japan’s Asahi Kasei – operates a 200,000 tonne/year propane ammoxidation plant in Map Ta Phut, Thailand.

OUTLOOK

Most market participants agree that the market for Q1 will extend the uptrend on the back of heavy turnarounds and high feedstock costs.

South Korea’s Tongsuh Petrochemical shut its No 3 ACN line with a capacity of 245,000 tonnes/year in Ulsan late December for maintenance, which will last until mid-January, a company source said. South Korea’s Taekwang Petrochemical plans to shut its 290,000 tonne/year ACN plant in Ulsan in February for a three-week turnaround, a company source said.

Major producer Asahi Kasei’s 200,000 tonne/year plant in Mizushima is also expected to be taken off line in mid-February for around two months of maintenance, a company source said.

Formosa Plastics Corp (FPC) plans to shut its 280,000 tonne/year ACN plant in Mailiao in early February for around one month.

Apart from the reduced supply from Asia, deep-sea cargoes will likely be decreased in the first quarter of 2014.

The global ACN producer INEOS Nitriles is cutting production of ACN at its Green Lake, Texas, facility by 50% in January due to “unsustainable margins”.

A “significant proportion of capacity” will be idled through the first quarter of 2014, subject to a review of markets, INEOS Nitriles said.Most market participants said Asian ACN prices will likely rise to above $2,000/tonne in Q1, but prices in Q2 may soften after the completion of these turnarounds.


By: Judith Wang
+65 6780 4359



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