APIC ’19: Asia ACN uptrend to be capped by slowing demand

TAIPEI (ICIS)–Asia’s acrylonitrile (ACN) price uptrend may be capped by slowing demand from downstream derivative markets, even as tight supply is expected to remain in the near term.

Shipping containers are seen at the port of Newark in the US. (Photo by JUSTIN LANE/EPA-EFE/REX/Shutterstock)

Spot buying indications during the week were at $2,050-2,100/tonne CFR (cost & freight) NE (northeast) Asia, market sources said.

Demand has slowed down amid squeezed margins and the US-China trade war.  The May-June period is also the off-peak season for the ACN market.

“Supply is very short now and will remain snug in the near future, so how high ACN prices could increase will depend on the downstream derivatives,” a regional trader said on the sidelines of the Asia Petrochemical Industry Conference (APIC) 2019 being held in Taipei on 16-17 May.

In the week ended 10 May, spot ACN prices rose by $70-80/tonne from the previous week to $1,970-2,030/tonne CFR NE Asia, up by over 40% since mid-January, according to ICIS.

Prices have been rising on the back of tight supply.

Regional supply has turned scarce following INEOS’ force majeure (FM) at its Green Lake plant in the US from mid-February, as most of the plant’s output is exported to Asia.

The consequent spike in Asian prices caused the arbitrage window from the US to this region to close.

Furthermore, Asahi Kasei’s upcoming turnarounds at plants in Japan and Thailand in May will further drain the availability in the region.

Asian suppliers have limited spot cargoes after their downstream contract customers requested an increase in supply.

Spot buyers sitting on low stocks had to pay higher numbers to secure cargoes.

Consumption of ACN from key derivative acrylonitrile-butadiene-styrene (ABS) market, on the other hand, is getting slower amid squeezed margins.

Producers in major downstream acrylic fibre (AF) sector are currently struggling with negative margins following ACN’s upward spiral, with some indicating they will shut down production after finishing up their current feedstock inventory.

The escalating China-US trade war has hit downstream ACN demand as the US’ additional tariffs on China’s finished good will eventually affect consumption for upstream chemicals.

ACN is used in the production of synthetic fibres for clothing and home furnishings, engineering plastics and elastomers.

“The slowing signs in demand side may put a cap on further price rise,” an end-user said.

Focus article by Judith Wang

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