OUTLOOK ’18: China ACN to remain strong in ‘18 on planned maintenances

22 December 2017 06:30 Source:ICIS News

SINGAPORE (ICIS)--China acrylonitrile (ACN) market rebounded in 2017 because of shrinking supply caused by environmental issues and it is likely to remain strong next year due to a large number of scheduled shutdowns.

According to ICIS estimates based on the announced shutdown schedules for 2018, ACN market will see production losses exceed 200,000 tonnes, and downstream industry will need to resort to imports from the US, Europe and other regions.

Producers including Shanghai SECCO and Anqing Petrochemical all have overhaul schedules for 2018.

The maintenance at Shanghai SECCO alone will cause nearly 100,000 tonnes of production losses.

Jilin Petrochemical, the second largest ACN producer in China, will also carry out triennial overhaul, with expected production losses at 50,000-60,000 tonnes.

It is noteworthy that Qilu Petrochemical has not planned to restart its unit in 2018, which was shut down this year because of environmental issues.

Sailboat Petrochemical had planned to carry out the first overhaul at its unit in the fourth quarter of 2017.

However, the schedule has been postponed several times because of considerable margin and the maintenance is expected to start in 2018.

All the units in China will undergo planned maintenance in 2018, except Fushun Petrochemical who had completed it in 2017.

The total production losses for the whole year are expected to exceed 200,000 tonnes, which in turn will support ACN prices as the market is mainly affected by supply-demand fundamentals rather than crude futures movement.

Table 1: Maintenance plans for ACN units in China, 2018

Region City Producer Capacity

MT

Maintenance in 2018 Production losses (MT)
East China Shanghai Shanghai SECCO 52 End of September-End of November 9.8
East China Anqing Anqing Petrochemical 21 15 days of alternate maintenance at No.1 and No.2 in April-May 1
East China Dongying Keluer Chemical 13 20-25 days in September 1.05
East China Zibo Qilu Petrochemical 8 May be moved to Keluer’s plant, with capacity at 60,000 tonnes/year after 2018, to be determined 0
Northeast China Jilin Jilin Petrochemical 45.2 40-45 days of triennial overhaul in April-May 5.6
Northeast China Fushun Fushun Petrochemical 9.2 No overhaul 0
East China Jiangsu Sailboat 26 Maybe April 2.3
Northeast China Daqing Daqing Petrochemical 8 One month maintenance during July to September 0.65

Source: ICIS

ACN prices are mainly affected by the supply-demand fundamentals rather than prices of crude oil or other commodities.

For the whole of this year too, prices were closely related to supply and demand landscape.

The first peak appeared in March-April when Shanghai SECCO and Jilin Petrochemical were carrying out maintenance, while acrylic fibre inventories were low and operating rate in the acrylonitrile butadiene styrene (ABS) industry was high at around 85%.

The unexpected maintenance at Qilu Petrochemical in the third quarter marked the beginning of four months of increase.

ICIS data showed that, ACN spot prices were at Chinese yuan (CNY)16,900-17,100tonne Ex-tank East China in October, which were up by CNY6,350tonne or 60% from July.

Prices even hit CNY17,500/tonne in Shandong DEL, the highest level in five years, because of hurricanes in the US, which largely decreased import volumes in the following months.

Market participants believe that prices in 2018 will peak during concentrated maintenance period, which will happen in the second quarter and in September-November.

Anqing Petrochemical, Jilin Petrochemical and Jiangsu Sailboat plan to carry out plant maintenance in the second quarter.

The maintenance time of the former two suppliers is relatively fixed, while the latter one has not confirmed a specific time.

It is not suitable for producers to shut their plants for planned maintenance in the first quarter on the Chinese Lunar New Year holiday (15-21 February) and the relatively cold weather.

Therefore, the producers are expected to carry out turnarounds after March, according to some market players.

The total production loss of the above three producers will be around 90,000 tonnes.

Shandong Haili Chemical might start up its 130,000 tonne/year new plant in late 2017/early 2018, but the additional capacity could not offset the production loss because of the volumes supplied to its own downstream ABS plant.

Downstream ABS producers are expected to continue to run their plants at relatively high rates amid sufficient cash flows.

Downstream acrylic fiber producers are expected to keep relatively low run rates and inventory levels in the first quarter in view of the traditional lull season and the Chinese Lunar New Year holiday.

However, the production and sales volumes are likely to rise in the second quarter as a result of the peak sales season, which is expected to support the feedstock acrylonitrile market further.

Shanghai SECCO and Shandong-based Keluer plan to shut their plants for maintenance during September-November, with the combined production loss of around 110,000 tonnes.

During the period, downstream acrylic fiber producers will enjoy the traditional peak sales season in domestic market.

In addition, ABS end-user white house appliance manufacturers - including air conditioner and refrigerator makers - will be in the peak sales season.

However, a few downstream producers believed that despite domestic supply would decline sharply, a year-on-year increase in import volumes would partially offset the domestic production loss.

The output in Europe and the US in 2018 will rebound following the major maintenance of most plants in 2017 and the production loss caused by hurricanes in the US.

Additionally, it could not be ruled out that major downstream producers will increase their purchasing volumes for contract imports to fill domestic gap in 2018 in view of the early announcement of domestic turnaround plans.

According to ICIS data, the number of overseas plants to be shut for planned maintenance in 2018 will be limited, particularly in the US.

Domestic buyers will show much stronger interest in imports in 2018, with an increase trend in import contract volumes, according to domestic downstream buyers and some traders.

Maintenance plans of acrylonitrile plants in Europe, the US and Asia (excluding China)

Contry City Company Capacity(MT) Maintenance Schedule in 2018
Thailand Map Ta Phut PTT 20 Undecided
Japan  Mizushima ASAHI KASEI 20 No overhaul
Korea Ulsan Taekwang 29 5-26 March
Korea Ulsan Tongsuh Petrochemical No.3 24.5 Maintenance in October for one month
Korea Ulsan Tongsuh Petrochemical No.4 24.5 Maintenance in May for one month
Japan Niihama, Ehime Pref Sumitomo Chemical 7 Maintenance in September for one month
Taiwan Kaohsiung Formosa 28 Stopped on 15-17 January for a three-week or one month maintenance
Taiwan Kaohsiung CPDC 24 One week maintenance in March; two weeks in Nov.
UK Seal Sands Ineos 28 Maintenance in April for one month
Russia Saratov Lukoil 15
US Green Lake Ineos 54.5 No overhaul
US Fortier, LA Cornerstone 24
US Texas Ascend 59 No.2 and No.3 maintenance in April and Sep.
German Cologne Ineos 32
Source: ICIS

According to ICIS data, the number of overseas plants to be shut for planned maintenance in 2018 will be limited, particularly in the US. Domestic buyers show much stronger interest in imports in 2018, with an increase trend in import contract volumes, according to domestic downstream buyers and some traders.

Outlook article by Ivy Ruan

ICN

By Ivy Ruan