European ACN spot prices rise $60-100/tonne on global tight supply

24 January 2014 23:59 Source:ICIS News

LONDON (ICIS)--European acrylonitrile spot prices have risen by $60-100/tonne in the past week because of global supply tightness and arbitrage opportunities in the US and Asia, sources confirmed on Friday.

European spot prices reached $1,850-1,950/tonne CIF W Europe in the week ending 24 January.

In the same period, Asian spot prices rose a further $30/tonne, the fifth successive week of price rises, to $1,950-1,980/tonne CFR (cost & freight) NE Asia because of high feedstock propylene costs and tight supply. Regional sellers’ offers were bullish, hitting $2,000/tonne CFR China and above.

Price offers at this level were mirrored by European exporters.

“Demand is good. As we discussed last week, a lot of requests for Asian product. It's the first time I've seen people want to ship it to China - it must be price availability driven,” a producer said.

Several upcoming shutdowns in the region in February are expected to keep the market tight after the Lunar New Year holiday period, some sources said.

“In Europe, it's still firm. There's some turnaround in Asia -  a number of shutdowns, so [supply] should stay tight for two months,” a European exporter said.

European spot prices have been lagging price rises in other regions in recent weeks, and European spot prices have been the lowest globally throughout 2014.

Nevertheless, with prices in the US and Asia remaining high, European offers below $1,850/tonne have gradually disappeared from the market as sellers look to arbitrage opportunities overseas.

With an absence of competitively-priced imports arriving into Europe, price ideas on the buy-side have also risen.

“I think the trend is up, but I cannot agree everything is fixed at that number [above $1,900/tonne],” a buyer said.

US Gulf prices in the week ending 17 January were in the mid-to-high $1800s FOB (free on board) export.

Tight supply and globally rising prices have caused European sellers to increase their offer levels, with the majority now offering material at $1,900/tonne and above, although a minority continue to see prices in the mifd-$1800s/tonne.

Several sellers said that they would not be willing to offer material at below $1,950/tonne, and up to $2,000/tonne was heard from sellers, but could not be verified on the buy-side.

Nevertheless, low vessel availability from Europe to Asia continues to limit arbitrage opportunities.

“Looking at demand, it's not happening. Let's be honest, Asia's having enquiries but it's not so important. Of course there's activity but not so much. It's not easy to get vessels for Asia,” a trader said.

Acrylic fibre demand remains weak because of poor margins and macroeconomic conditions. As a result, domestic activity in Europe is predominantly being covered on a contractual basis.

By Mark Victory