China ACN uptrend to slow down as downstream demand shrinks

SINGAPORE (ICIS)–China’s spot acrylonitrile (ACN) prices have been on an uptrend since the start of the year on the back of tight supply, but the gains may be capped by waning demand from major downstream acrylic fiber (AF) sector.

AF production margins are being eroded by spikes in feedstock ACN values.

On 19 April, spot ACN prices in east China stood at Chinese yuan (CNY) 14,200-14,400/tonne ($2,116-2,146/tonne) ex-tank, up by CNY2,650/tonne or 23% from early January, according to ICIS data.

ACN is used in the production of synthetic fibres for clothing and home furnishings, engineering plastics and elastomers. (Photo by Ed Reeve/VIEW/REX/Shutterstock)

Prices had been driven up at the start of the year by strong demand from downstream AF, acrylonitrile-butadiene-styrene (ABS) and acrylamide sectors.

The upward pressure on prices was aggravated by a consequent tightening of global supply in February and March due to production disruptions in the US, UK and Germany.

Tight global supply conditions are expected to continue throughout the second quarter.

In China, a 130,000 tonne/year plant operated by Shandong Haili Petrochemical has been shut since 3 March due to mechanical issues, with no definite restart date.

The plant may not resume production until the third quarter, market sources said, but this could not be confirmed with the company.

Following strong price gains, ACN has now become too expensive for downstream users, particularly, the AF sector, which is struggling to remain profitable.

The April acrylic staple fibre (ASF) contract may be settled at a higher price than March’s CNY16,500/tonne EXWH (ex-warehouse) because of high ACN prices, but may not increase much due to “gloomy downstream demand from yarn market”, a producer said.

AF must be priced higher by at least CNY3,500-4,000/tonne than ACN, for AF producers to generate margins.

Based on current ACN prices and the March ASF settlement, the spread has narrowed to CNY2,200/tonne.

Some AF producers have shut down or plan to shut their plants to offset the high raw material cost and lacklustre downstream demand.

Chinese AF plants’ overall average run rate decreased to around 60% in April, from about 80% in March, acording to ICIS data.

China acrylic fibre production

Producer	AF Capacity (tonnes/year)	Current run rate
Jilin Chemical Fiber-Qifeng	140,000	50%
Jilin Chemical Fiber-Jimeng	160,000	50%
Qilu Petrochemical	54,000	60%
Anqing Petrochemical	70,000	60%
Shanghai Petrochemical	160,000	90-100%
Hangzhou Bay	60,000	60-70%
Daqing Petrochemical	65,000	60%
Ningbo Zhongxin	50,000	0%
Aikerui	60,000	50%

Ningbo Zhongxin’s 50,000 tonne/year AF plant was shut down on 8 April for a two-week maintenance.

Jilin Chemical Fiber plans to shut its two plants with a combined capacity of 300,000 tonnes/year in early May for two weeks; while its 60,000 tonne/year AF plant in Hebei province is currently running at around 50% of capacity.

Focus article by Ivy Ruan

($1 = CNY6.71)