Asia ACN at near 3-year highs; price uptrend may slow down

SINGAPORE (ICIS)–Asia’s acrylonitrile (ACN) prices have surged 33% over a two-month period to their highest levels in nearly three years, but the uptrend is expected to slow down amid long holidays in the key China and South Korea markets.

Buyers have started to resist the price spike – which started on 28 July – also on expectations that prevailing tight supply would ease in the near term.

In the week ended 29 September, ACN prices were assessed at $1,850-1,950/tonne CFR (cost and freight) NE (northeast) Asia, which were last seen on 7 November 2014, according to ICIS data.

Most players are away this week as China is on holiday on 1-8 October for its National Day and mid-Autumn Festival, while South Korea is celebrating its Chuseok or Thanksgiving holiday on 3-5 October.

“I expect the price rise to slow down after the holiday as we could not afford to pay the prevailing high feedstock prices,” a major downstream buyer said.

Some industry sources expect further price uptrend in the Asian ACN market will be capped as availability of cargoes will improve with recent plant restarts.

“The ACN prices rose too fast, and we could not digest the cost and pass on to our customers,” a downstream acrylic fibre producer said.

Most market participants attributed the sharp price rise to reduced supply in Asia caused by unexpected shutdowns of some Chinese plants and following a production disruption at a major facility in the US.

In China, Sinopec Qilu Petrochemical’s 80,000 tonnes/year ACN plant at Zibo in the eastern Shandong province has been shut since mid-July with no definite restart date, amid strict environmental inspections of chemical factories in the country.

Jilin Petrochemical’s 106,000 tonne/year No 1 ACN unit in Jilin province in northeastern China was taken off line on 12 June for the same reason and is expected to be restarted this month. Its bigger plant with a 120,000 tonne/year capacity was also shut on 9 August and resumed production on 28 September.

Major Asian producers had no available spot cargoes as most downstream users increased their contract volumes amid the tight supply.

Deep-sea ACN supply from the US is expected to be reduced in October and November, as INEOS declared a force majeure at its Green Lake plant in Texas, US.

The Green Lake plant, which was among the massive petrochemical capacities that were shut when Hurricane Harvey hit the US Gulf Coast in late August, restarted on 27 September.

Focus article by Judith Wang

Pictured above: Acrylonitrile (ACN) is used in the production of acrylic fibres, which go into home furnishings like sofas. (Photographer: Kelly Redinger/Design Pics Inc/REX/Shutterstock)