China acrylic fibre output to stay capped on soaring ACN costs

SINGAPORE (ICIS)–China’s acrylic fibre (AF) output may continue to be capped in September as production margins are being eroded by high cost of feedstock acrylonitrile (ACN).

Domestic AF plants, which have a total capacity of 819,000 tonnes, may continue running at an average rate of 50% for the rest of the month, market sources said.

In the week ended 7 September, the plants posted an average operating rate of around 55%, up from 52% in August following the restart of a 60,000 tonne/year plant in Hebei province.

The plant operated by Hebei Akerui restarted in early September and is running at around 80% of capacity.

It may have to shut down again before mid-September given weak profitability amid spikes in ACN prices, with restart unlikely until after China’s week-long National Day celebration on 1-7 October, a company source said.

“But we might delay the restart if the situation [has not improved by then],” the source said.

Jilin Jimeng’s 160,000 tonne/year plant and Jilin Qifeng’s 140,000 tonne/year plant, meanwhile, are running at a lower rate of 40% this month from 50% in August.

The three companies are subsidiaries of Chinese AF major Jinling Chemical Fiber, whose total capacity of 360,000 tonnes/year accounts for about 44% of China’s domestic AF production.

Market players expect AF plants’ operating rate to fall further in October given scheduled shutdowns at some plants.

For the whole of 2018, China’s AF plants are projected to post a lower run rate of 69% compared with 78% in 2017, largely on account of high feedstock ACN cost and some scheduled plant turnarounds.

China’s domestic ACN prices have soared to a seven-year high and have been rising steadily for four months because of tight supply.

On 12 September, ACN prices in east China were at yuan (CNY) 19,100-19,300/tonne ($2,780-2,809/tonne) ex-tank, up by CNY100/tonne from the previous week, according to ICIS data.

“We can’t afford any higher feedstock [ACN] cost as it was hard to transform the cost to the downstream buyers. We have to cut the operation rate to maintain low AF inventories,” said a source at another AF producer.

In Zhejiang province, Hangzhou Bay Acrylic Fibre Co shut its 60,000 tonne/year plant in Hangzhou around 11 September because of margin erosion. The plant may remain down for a month, market sources said.

Focus article by Ivy Ruan

($1 = CNY6.87)

Picture: Acrylonitrile (ACN) is used in the production of acrylic fibres, which go into home furnishings like beds. (Photographer: Anthony Weller/VIEW/REX/Shutterstock)