Falling propylene prices and weak downstream demand in China contribute to bearish sentiment
Asia’s acrylonitrile (ACN) prices are likely to remain under downward pressure, after falling by over 3% in March on the back of falling feedstock prices and slower-than-expected demand, industry sources said on 31 March.
ACN prices in Asia fell to $1,900-2,010/tonne CFR (cost & freight) NE (northeast) Asia in the week ended 28 March, down from $2,000-2,050/tonne CFR NE Asia seen in early March, according to ICIS data.
The falling feedstock propylene prices had cast a shadow on the market sentiment, which caused buyers to retreat to the sidelines, sources said.
Asia’s propylene prices fell to below $1,400/tonne CFR NE Asia by the end of March, compared with an average price of $1,445/tonne CFR NE Asia in early March, according to ICIS data.
The influx of cheaper deep-sea cargoes from the US and Europe into Asia further dampened the market sentiment in Asia.
Spot offers for deep-sea cargoes were heard in the low $1,900s/tonne CFR NE Asia to $1,950/tonne CFR NE Asia, while the offers for Asian cargoes remained largely at $2,000/tonne CFR NE Asia. Some end-users opted to buy the cheaper deep-sea cargoes instead of Asian cargoes, in order to maintain their margins amid the slowing downstream demand.
“We could not afford to pay higher numbers for Asian cargoes as we could not pass on the cost to downstream customers,” an end-user said.
Looking forward, many market participants expect ACN prices to remain under downward pressure should the downstream demand remain weak amid an economic slowdown in China.
“Given the falling propylene prices and decreasing domestic prices in China, I think the import ACN prices will also continue the trend in coming weeks. So we are waiting now,” the end-user said.
Domestic ACN prices fell by yuan (CNY) 200/tonne ($32/tonne) week on week to CNY14,400-14,500/tonne ex-tank in the week ended 28 March, according to ICIS.
The ongoing plant shutdowns in Japan and China could not deter the price drop amid the weak downstream demand from downstream acrylonitrile-butadiene-styrene (ABS) and acrylic fibre (AF) sectors.
China-based ACN producer, Anqing Petrochemical, shut its 130,000 tonne/year ACN plant on 14 March for around 20 days of maintenance, a company source said.
China-based ACN producer, Shanghai SECCO Petrochemical, shut down its 260,000 tonne/year ACN plant in Shanghai on 10 March for a 40-day scheduled maintenance shutdown, a company source said.
Asahi Kasei’s 200,000 tonne/year ACN plant in Mizushima, Japan is currently shut for a scheduled turnaround, a company source said earlier.
The plant was taken off line on 23 February, and will be down for around 50 days, according to the source.
“Prices still fell even though some plants are undergoing maintenance, which means the demand is really slowing,” a trader said.