SINGAPORE ,June 14-Asia acrylonitrile (ACN) prices are likely to face increasing downside pressure in July as derivative acrylic fibre (AF) and acrylonitrile-butadiene-styrene (ABS) producers cut operating rates on expectations of a sluggish third quarter, traders said.
We will not be importing ACN in the third quarter as we expect the third quarter to be weak. The European sovereign debt crisis will slow down demand for China-made products, a Chinese trader said.
Europe is China s largest export market, receiving a wide range of consumer products including garments, office equipment and household appliances which require raw materials such as AF and ABS for their manufacture.
We will cut down the operating rate of our AF plant in July if the market does not improve as our margins have been wiped out by the high ACN prices, a Chinese AF producer said.
Apart from the downstream AF makers, the other derivative ABS producers in China have also reduced operating rates to around 80%, as orders for finished products from Europe have been reduced or cancelled.
Both downstream AF and ABS makers have seen their margins being eroded as ACN prices in Asia have been on a relentless upswing.
ACN spot prices had surged $500/tonne (?15/tonne) since January to peak at $2,500/tonne CFR (cost and freight) Asia in mid-April.
Meanwhile, ACN prices have been perched above $2,400/tonne CFR Asia the past month despite mounting resistance from the downstream AF makers who said the ACN values should be pegged at $2,200/tonne CFR Asia, given falling upstream propylene values.
The feedstock propylene slipped below $1,000/tonne CFR Asia last week, down $200-300/tonne since May while in the US June chemical grade propylene contracts were settled 8 cents/lb down at 54 cents/lb.
However, ACN producers said supply/demand balance was the key factor in determining the ACN price and that supply continued to remain tight in the global market.
Supply is still tight and there is very little spot availability, a major ACN producer said.
A spate of unexpected outages in Europe and a heavy turnaround schedule earlier this year in Asia had crimped ACN spot availability in the global market, thus lifting prices to $2,500/tonne CFR (cost and freight) Asia.
However, the downside pressure has been building up as Chinese traders and downstream AF and ABS producers retreated from the market and adopted a wait-and-see stance, given market uncertainty and falling prices.
Chinese domestic ACN prices have fallen to yuan (CNY) 20,000/tonne ($2,928/tonne) ex-tank, down CNY 2,500/tonne since May while the downstream AF values have dropped to CNY 22,000/tonne ex-works down CNY 1,500/tonne in the past month.
Major ACN producers include Asahi Kasei, INEOS, Taekwang Industrials, China Petrochemical Development Corporation (CPDC).
Major AF makers include Tong Hwa Acrylic Fibre, Indian Acrylics, Hangzhouwan Acrylic Fibre and Jilin JiMont Fibre while ABS makers include Chi Mei, Toray and LG Chem.
($1 = ?.83 / $1 = CNY6.83)
We will not be importing ACN in the third quarter as we expect the third quarter to be weak. The European sovereign debt crisis will slow down demand for China-made products, a Chinese trader said.
Europe is China s largest export market, receiving a wide range of consumer products including garments, office equipment and household appliances which require raw materials such as AF and ABS for their manufacture.
We will cut down the operating rate of our AF plant in July if the market does not improve as our margins have been wiped out by the high ACN prices, a Chinese AF producer said.
Apart from the downstream AF makers, the other derivative ABS producers in China have also reduced operating rates to around 80%, as orders for finished products from Europe have been reduced or cancelled.
Both downstream AF and ABS makers have seen their margins being eroded as ACN prices in Asia have been on a relentless upswing.
ACN spot prices had surged $500/tonne (?15/tonne) since January to peak at $2,500/tonne CFR (cost and freight) Asia in mid-April.
Meanwhile, ACN prices have been perched above $2,400/tonne CFR Asia the past month despite mounting resistance from the downstream AF makers who said the ACN values should be pegged at $2,200/tonne CFR Asia, given falling upstream propylene values.
The feedstock propylene slipped below $1,000/tonne CFR Asia last week, down $200-300/tonne since May while in the US June chemical grade propylene contracts were settled 8 cents/lb down at 54 cents/lb.
However, ACN producers said supply/demand balance was the key factor in determining the ACN price and that supply continued to remain tight in the global market.
Supply is still tight and there is very little spot availability, a major ACN producer said.
A spate of unexpected outages in Europe and a heavy turnaround schedule earlier this year in Asia had crimped ACN spot availability in the global market, thus lifting prices to $2,500/tonne CFR (cost and freight) Asia.
However, the downside pressure has been building up as Chinese traders and downstream AF and ABS producers retreated from the market and adopted a wait-and-see stance, given market uncertainty and falling prices.
Chinese domestic ACN prices have fallen to yuan (CNY) 20,000/tonne ($2,928/tonne) ex-tank, down CNY 2,500/tonne since May while the downstream AF values have dropped to CNY 22,000/tonne ex-works down CNY 1,500/tonne in the past month.
Major ACN producers include Asahi Kasei, INEOS, Taekwang Industrials, China Petrochemical Development Corporation (CPDC).
Major AF makers include Tong Hwa Acrylic Fibre, Indian Acrylics, Hangzhouwan Acrylic Fibre and Jilin JiMont Fibre while ABS makers include Chi Mei, Toray and LG Chem.
($1 = ?.83 / $1 = CNY6.83)
