OUTLOOK ’14: Asia ACN prices to remain firm in Q1 on tight supply

08 January 2014 02:06 Source:ICIS News

By Judith Wang

SINGAPORE (ICIS)--Asia’s acrylonitrile (ACN) prices are expected to remain firm in the first quarter of 2014 on the back of the heavy turnarounds and high feedstock cost, industry sources said.

Asia’s ACN prices closed at $1,850-1,900/tonne CFR (cost & freight) NE (northeast) Asia in the week ended 3 January, up from $1,750-1,840/tonne CFR NE Asia recorded in early December, according to ICIS.

On the supply side, several producers are expected to shut their plants for maintenance in the first quarter of this year, which may push up prices further, sources said.

South Korea’s Tongsuh Petrochemical shut its No 3 ACN line in Ulsan late December for maintenance, which will last until mid-January, a company source said.

South Korea's Taekwang Petrochemical plans to shut its 290,000 tonne/year ACN plant in Ulsan in February for a three-week turnaround, a company source said.

Major producer Asahi Kasei’s 200,000 tonne/year plant in Mizushima is also expected to be taken off line in mid-February for around two months of maintenance, a company source said.

Formosa Plastics Corp (FPC) plans to shut its 280,000 tonne/year ACN plant in Mailiao in early February for around one month.

Apart from the reduced supply from Asia, the deep-sea cargoes will likely be decreased in the first quarter of 2014.

The global ACN producer INEOS Nitriles is cutting production of ACN at its Green Lake, Texas, facility by 50% of capacity in January due to “unsustainable margins”, the company announced earlier.

A “significant proportion of capacity” will be idled through the first quarter of 2014, subject to a review of markets, INEOS Nitriles said in a news release.

Meanwhile, the high feedstock propylene cost forced the producers to firm their prices given the squeezed margins.

“Asia propylene prices are hovering at above $1,400/tonne for most of time in [the] second half of last year, which increased our production cost sharply in 2013. I think propylene prices may maintain at a high level in 2014,” a regional producer said.

Asia propylene prices closed at $1,495-1,515/tonne CFR NE Asia, which already put the average price to above $1,500/tonne CFR NE Asia at the beginning of the year, according to ICIS.

“We expected that the ACN prices will increase further in the coming months because of the tight supply,” a trader said.

In the key domestic market, prices also increased early this year, which lent some support to import prices, sources said.

Domestic prices rose to yuan (CNY) 13,600-13,800/tonne ($2,248-2,281/tonne) ex-tank in the week ended by 3 January, up by CNY800/tonne from 20 December, according to ICIS.

However, whether the prices could maintain the momentum would still depend on the downstream demand.

Most end-users said it was too difficult for them to pass on the high cost. Hence, they may reduce the operating rate or shut down their plants if ACN prices continue to increase.

“If we could not pass on the high ACN cost to our downstream products, then we have to consider to shut down the plant,” a downstream acrylic fibre (AF) producer said.

By Judith Wang