Chemical profile: US acrylonitrile

27 June 2014 09:44 Source:ICIS Chemical Business

Acrylonitrile (ACN) is used mainly as a monomer or comonomer in the production of synthetic fibres, plastics and elastomers. Its largest end-use is in the manufacture of acrylic fibres, which are used in clothing as well as home furnishings. Another major outlet for ACN is the acrylonitrile-butadiene-styrene (ABS) market, which is primarily used in plastics for the automotive and home building sectors. Other downstream chemicals include styrene-acrylonitrile (SAN), adiponitrile (ADN), acrylamide and nitrile rubber copolymers.

The market has been soft-to-steady, with most participants attributing any strength in pricing to tightness in supply rather than improvement in demand. INEOS Nitriles announced in December 2013 that it would cut production by 50% at its 545,000 tonne/year plant in Green Lake, Texas, US. Citing unfavourable economic conditions, INEOS said a significant portion of capacity would be idled through the first quarter, but a company source said it will continue to operate at reduced rates until margins reach a sustainable level.

Ascend Performance Materials conducted planned maintenance at two of its plants in February and March 2014, and its largest plant is scheduled for a turnaround in August.

Cornerstone recently completed its scheduled turnaround, while the Pemex/Unigel joint venture plant in Mexico had also been shut down a number of times because of production issues.

Additionally, there has been a high number of plant turnarounds in Asia, where the US Gulf conducts much of its export business. Meanwhile, domestic demand has been weaker than expected, particularly in the downstream ABS market, which like many other industries was impacted by the long, harsh winter.

Automotive sales in the first quarter were not as strong as anticipated, and the housing sector so far this year continues to report mixed results.

Global ABS demand has been described as lacklustre, especially because a weak Chinese economy dampened the downstream market for finished goods. In other downstream markets, the acrylic fibre (AF) industry continued to face strong competition from polyester and cotton.

Even though two AF producers had halted production in 2013 – Montefibre Hispania’s 95,000 tonne/year plant in Spain and RadiciGroup’s 10,000 tonne/year plant in Brazil – ACN market participants are not anticipating a strong pick-up in demand from that sector.

Meanwhile, the downstream carbon fibre industry continues to make vehicles lighter and more fuel efficient. However, some ACN market participants are skeptical that this sector will expand as fast as some are projecting.

US acrylonitrile spot prices had ended 2013 on a weak note, with average prices falling from $1,800/tonne at the beginning of the fourth quarter to $1,650/tonne during the last weeks of the year. Demand was lacklustre, and ACN producers said they were breaking even or operating below margins. In December 2013, INEOS significantly reduced its production rates, which tightened domestic supply. Going into the new year, several producers in Asia began conducting maintenance on their plants, which helped drive demand for deep-sea cargoes.

Combined with upward pressure from the rising costs for feedstock propylene, ACN spot prices began moving up very quickly, reaching a high of $1,915/tonne at the end of February 2014. Price ideas amid US Gulf suppliers became mixed in April and May, as some material was being sold in the low $1,700s/tonne, while others trades were reported in the $1,800s/tonne. By mid-May, ACN market participants said supply seemed to have tightened amid turnarounds and production issues, and prices began stabilising in the mid-$1,800s/tonne.

The dominant process for ACN production remains propylene ammoxidation, despite attempts to push propane ammoxidation as a feasible alternative. The former – in which propylene, ammonia and air are reacted in a fluidized bed reactor – remains the most cost-effective method of manufacturing ACN, although propane ammoxidation plants are opening in Asia.

PTT Asahi Chemical – a joint venture between Thailand’s PTT and Japan’s Asahi Kasei – operates a 200,000 tonne/year propane ammoxidation plant in Map Ta Phut, Thailand. INEOS experimented with a propane demonstration unit in Green Lake, Texas, US, but found it was not cost effective.

Sources said they have seen more price discipline in the past two months than all year. In the near term, spot prices are trending toward $1,900/tonne, although it remains to be seen whether they will reach this level and stay there. Still, market conditions are expected to improve in the third quarter as this is typically the strong season for ACN. Supply usually increases as producers complete their turnarounds and return to the market.

Additionally, demand is expected to pick up as downstream AF makers purchase ACN around August before converting it into fibres in September and October for clothing and blankets used in the winter. The downstream automotive industry continues to be strong, which should drive demand for ABS.

By Tracy Dang