INEOS's US ACN plant restart likely to ease global tightness

Author: Lucas Hall

2019/07/17

HOUSTON (ICIS)--The restart of INEOS Nitriles' Green Lake, Texas, acrylonitrile (ACN) plant is expected to gradually ease supply concerns and push down prices in the US amid a seasonal lull in global derivatives markets.

Photo by James Gourley/REX/Shutterstock

Green Lake is expected to restart its 545,000 tonne/year plant later this week, a company source confirmed.

The plant is expected to be back at full production mid-next week, said the source.

The plant, which represents approximately 35% of US production capacity, has been shut and on force majeure since early February, prompting severe supply tightness in the US market and pushing prices higher in 1H 2019.

Outages and force majeures at other INEOS ACN units in Europe have exacerbated the tight supply situation in the US.

H2 Global ACN outages 

Although global demand has slowed compared with 2019 amid lower macroeconomic growth, the ongoing US-China trade dispute and weaker demand in the global automotive manufacturing sector, the sheer impact of the Green Lake and other INEOS outages kept supply tight.

However, the Green Lake restart and increasing capacity in the key China market, alongside seasonal downturn in Asia, is expected to ease supply and demand concerns and push prices in the US lower.

China's acrylic fibres (AF) capacity utilisation fell from 72% in April and is expected to drop below 50% in July.

Some acrylamide plants in China are also shut amid the traditional summer lull.

Global acrylonitrile-butadiene-styrene (ABS) demand is expected to be a major factor in US pricing in the short term given the derivative's increasing share of global ACN demand.

Demand in China has been stable, while demand in the rest of Asia has been tepid amid ongoing uncertainty surrounding the US-China trade talks.

Market participants in the US were optimistic that ABS demand would pick up in third quarter, but high inventories in Asia amid non-conclusive US-China trade talks have limited buying from the region. ABS supply is also ample in the US, further stymying demand.

US spot export ACN prices were assessed at $1,760-1,790/tonne FOB (free on board) in the US Gulf on Friday.

ICIS Editorial Chart goes hereACN is used in the production of synthetic fibres for clothing and home furnishings, engineering plastics and elastomers.

Major ACN producers in the US include Ascend Performance Materials, Cornerstone Chemical and INEOS Nitriles.

Image above shows objects made out of ABS, a derivative of ACN. 

Focus article by Lucas Hall