AFPM '19: Tight US ACN supply to extend into Q2

Source: ICIS News

2019/03/23

HOUSTON (ICIS)--Tight US acrylonitrile (ACN) supply is expected to extend into the second quarter on the back of major supply disruptions in the global market, heading into this year’s International Petrochemical Conference (IPC).

INEOS remains on force majeure at its US Green LakeUK Seal Sands and German Dormagen plants.

The plants account for 1.145m tonnes or more than 15% of global ACN capacity.

Cornerstone also began a scheduled turnaround at its Frontier, Louisiana, plant in mid-March, adding to the tight supply scenario. The turnaround is expected to be completed around the end of March.

As such, spot cargoes are largely unavailable as producers focus on meeting contractual demand over sale of material in the spot export market.

Although demand in key downstream sectors such as acrylonitrile-butadiene-styrene (ABS) is increasing and utilisation rates improving, demand has been slow to recover following the Chinese New Year, particularly in Asia, on the back of trade concerns between the US and China.

Moreover, elevated ACN prices stemming from tight supply are squeezing margins for lower-value acrylic fibres (AF). Lower margins may prompt AF producers to decrease utilisation rates in the short term, even as demand begins to seasonally increase.

As a result, it remains unclear if increased demand for material is stemming from true demand growth in downstream markets or from tight supply alone.

Meanwhile, poor weather conditions associated with winter snowmelt and fog are delaying ACN cargoes from leaving the USG. One producer said a Europe-bound cargo has been delayed in the area for about a week as of mid-March, with no indication of when it will lift.

Positive sentiment regarding the US-China trade talks is likely to ease concerns in the market as demand for downstream markets improves in the coming months.

Fewer turnarounds in Asia compared with last year could also ease concerns in the short term.

Meanwhile, sporadic cargoes from regions with extra spot export material available are likely to drive US spot export ACN prices in the short term amid tight supply and growing demand in the global market.

ICIS Editorial Chart goes hereMajor producers of US ACN include Ascend Performance Materials, Cornerstone Chemicals and INEOS Nitriles.

Hosted by the American Fuel & Petrochemical Manufacturers (AFPM), the IPC takes place on 24-26 March in San Antonio, Texas.

Focus article by Lucas Hall