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Asia ACN at 6.5-year high; new China capacity to ease tight supply   Asia ACN 6.5-year high new China capacity ease tight supply

 Source:ICIS News

SINGAPORE (ICIS)–Asia’s acrylonitrile (ACN) prices are at their highest in six-and-half years on the back of tight global supply, which could ease when a new plant in China starts up in late July.

Asia ACN 6.5-year high new China capacity ease tight supplyIn the week ended 13 July, spot prices were assessed at $2,150-2,200/tonne CFR (cost & freight) NE (northeast) Asia, which were last seen in mid-February 2012, according to ICIS data.Asia ACN 6.5-year high new China capacity ease tight supply

The prices were stable from the previous week, after rising by 12% from mid-April, the data showed.

The regional market was largely on an uptrend since the beginning of this year because of tightened supply amid a heavy plant turnaround schedule in Asia, coupled with the limited inflows of deep-sea cargoes.

Asia ACN 6.5-year high new China capacity ease tight supply

“The ACN prices do not follow the feedstock cost now, and they are driven by the supply side,” a regional trader said.Asia ACN 6.5-year high new China capacity ease tight supply

Based on prevailing prices of feedstocks propylene and ammonia, ACN producers are currently enjoying good margins of more than $500/tonne, market sources said.

A new capacity coming on stream in China, which is a major importer of ACN in Asia, may relieve the regional supply crunch to some extent amid further turnarounds in the second half.Asia ACN 6.5-year high new China capacity ease tight supply

Asia ACN 6.5-year high new China capacity ease tight supply

Shandong Haili Chemical Industry Co Ltd will be starting up its new 130,000 tonne/year ACN plant in China’s Shandong province on 27-28 July.

“I hope the new plant could finally start up after several delays, which may help ease the tight supply in the region,” a downstream user said.

Price support for ACN from the demand side may also weaken, with downstream acrylonitrile-styrene-butadiene (ABS) and acrylic fibre (AF) producers facing slowing sales in the summer months, with some mulling cutting production due to high feedstock costs.

“Our margins are very lean now. Further price rise [of ACN] will kill us,” a major downstream ABS producer said.Asia ACN 6.5-year high new China capacity ease tight supply

Picture: Acrylonitrile (ACN) is used in the production of acrylic fibres, which go into home furnishings like sofas. (Photographer:  Anthony Weller/VIEW/REX/Shutterstock)

By Judith Wang