Asia ACN loses 25% over 10 weeks; weak demand outweighs recent C3 gains

SINGAPORE (ICIS)–Asia’s acrylonitrile (ACN) prices have slumped by nearly 25% over the last 10 weeks on shrinking downstream demand amid the coronavirus pandemic, beating any uplift from recent strong gains in feedstock propylene (C3) market.

Spot ACN prices were assessed in the week ended 10 April at an average of $1,040/tonne CFR (cost & freight) China/NE (northeast) Asia, down by $55/tonne from the previous week, according to ICIS data.

Regional spot trades have been largely inactive, with buyers mostly relying on contract volumes.

Some end-users even reduced their contract volumes as they cut operation rates amid weak downstream demand.

Buyers in India used to be active in procuring spot cargoes but are currently sidelined due to an extended lockdown in the south Asian country until 3 May.

In China’s domestic market, spot ACN prices have shed around 39% from February, leading the slump in Asia.

Chinese producers are currently saddled with high inventory as they have been running their plants at high rates despite cuts in downstream production rates and hindered export trade.

In the week ended 10 April, the average China plant run rates stood at 82.5%.

Chinese producers are suffering from cost pressure with the price spread between ACN and propylene narrowing since February. ACN prices turned lower than propylene this week following a recent price spike in the feedstock market.

Market players are on a wait-and-see mode given questions on how sustainable is the price uptrend for feedstock propylene.

In view of a slowdown in demand, regional ACN producers, including Asahi Kasei Group and Formosa Plastics Corp, have lowered operating rates at their facilities to 70-80% in March and April.

As production costs have increased with lower run rates, as well as a reduction in contract volumes from buyers, producers were reluctant to lower prices by much.

There is an imbalance in the current demand-supply fundamentals, said a northeast Asian producer, adding that if the current situation does not improve, most producers may consider cutting production further.

In the second quarter, several turnarounds in China, South Korea, Europe and the US may help ease the supply surplus available in the market.

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

Focus article by Li Li Chng

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