APIC '19: Asia ACN uptrend to be capped by slowing demand


TAIPEI (ICIS)–Asia’s acrylonitrile (ACN) price
uptrend may be capped by slowing demand from
downstream derivative markets, even as tight
supply is expected to remain in the near term.

Shipping containers
are seen at the port of Newark in the US. (Photo
by JUSTIN LANE/EPA-EFE/REX/Shutterstock)

Spot buying indications during the week were at
$2,050-2,100/tonne CFR (cost & freight) NE
(northeast) Asia, market sources said.

Demand has slowed down amid squeezed margins
and the US-China trade war.  The May-June
period is also the off-peak season for the ACN
market.

“Supply is very short now and will remain snug
in the near future, so how high ACN prices
could increase will depend on the downstream
derivatives,” a regional trader said on the
sidelines of the Asia Petrochemical Industry
Conference (APIC) 2019 being held in Taipei on
16-17 May.

In the week ended 10 May, spot ACN prices rose
by $70-80/tonne from the previous week to
$1,970-2,030/tonne CFR NE Asia, up by over 40%
since mid-January, according to ICIS.

Prices have been rising on the back of tight
supply.

Regional supply has turned scarce following
INEOS’
force majeure
(FM) at its Green Lake plant
in the US from mid-February, as most of the
plant’s output is exported to Asia.

The consequent spike in Asian prices caused the
arbitrage window from the US to this region to
close.

Furthermore, Asahi Kasei’s upcoming turnarounds at plants in
Japan
and Thailand in May will further
drain the availability in the region.

Asian suppliers have limited spot cargoes after
their downstream contract customers requested
an increase in supply.

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Spot buyers sitting on low stocks had to pay
higher numbers to secure cargoes.

Consumption of ACN from key derivative
acrylonitrile-butadiene-styrene (ABS)
market, on the other hand, is getting slower
amid squeezed margins.

Producers in major downstream
acrylic fibre (AF) sector are
currently struggling with negative margins
following ACN’s upward spiral, with some
indicating they will shut down production after
finishing up their current feedstock inventory.

The escalating China-US trade war has hit
downstream ACN demand as the US’ additional
tariffs on China’s finished good will
eventually affect consumption for upstream
chemicals.

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

“The slowing signs in demand side may put a cap
on further price rise,” an end-user said.

Focus article by Judith Wang


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