Europe ACN demand strong through into H2

Author: Jane Massingham

2021/04/30

LONDON (ICIS)--European acrylonitrile (ACN) demand is strong for most end-use applications but most customers are covering requirements on contracts only and reducing run rates to avoid paying record high spot numbers.

Spot prices in Asia, the US and Europe have come off the March peaks, but remain historically high.

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RELENTLESS STRONG DEMAND
Globally supply is still tight, though there is less pressure than in February and March.

Demand for virtually all applications is strong.

Those buyers that leave a proportion of volume to be covered in the spot market spoke of tweaking rates lower to avoid exposure to the high numbers.

“Our run rates are 80% - we have more demand but it does not make sense to buy spot [at the moment],” one buyer said.

The exposure to spot prices does also depend on the application as margins for the likes of acrylonitrile-butadiene-styrene (ABS) have been able to absorb the recent  high prices, while acrylic fibre (AF) customers feel a greater pinch and are more likely to be cutting back run rates.

Supply constraints are less severe than in the past two months and this has seen some ABS customers, recently on the spot market, tending to move to the sidelines in order to assess the prices in the coming weeks.

As a result, this has left spot talk and discussions thin, while contracts continue to post a strong performance.

It is expected to take some months to see a normal balanced situation, not just due to the fact that Europe will still feel the strain from shutdowns in Russia and Belarus, but customers have a backlog of orders to fulfill.

INEOS Nitriles is running well again following unplanned downtime and planned maintenance in Dormagen, Germany and allocation rates are higher for May, some at 100% of volume and others describe it as minimum contract volumes; force majeure remains in place until a normal stock level returns.

CATCHING UP
For both buyers and sellers, there is some catch up to be done.

“Demand looks so strong to the end of the year,” one ABS buyer said.

“The backlog of orders is huge," it added, noting that some 2022 orders are already in place.

Another ABS producer said it was sold out to the end of the year.

Acrylamide players also talk of strong demand; one source said “it is consistently strong for the second half of the year."

But the same source added it was concerned these strong demand fundamentals could also face some unexpected disruption.

"The world is so fragile,” it concluded.

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

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