Asia ACN rises as demand improves amid supply constraints

03:40' PM - Thursday, 08/02/2018

Asia’s acrylonitrile (ACN) prices are set to rise further if ongoing supply constraints fail to ease soon.

On 2 February, ACN trades settled at an average of $1,875/tonne CFR (cost and freight) China, ICIS data showed.

Just a month ago, prices had stagnated at an average of $1,725/tonne CFR China for some time, as an influx of deep-sea cargoes amid a healthy output from regional plants boosted supply.

But one month on, regional supplies are now squeezed both by a heavy turnaround schedule for Asian plants, as well as by a slowdown in arrival of deep-sea cargoes. This led prices into an upward spiral.

Various northeast Asian producers said that they have limited spot availabilities for February and March, as they needed to stock up ahead of upcoming turnarounds, most of which will kick in from April-May period.

“My inventory is not high to begin with,” said a source from a regional producer. The producer is considering how much could be put aside for spot sales in the coming months, after taking into account stock replenishment needs.

Under these circumstances, sellers see little incentive to move cargoes unless “prices are satisfactory”, a trader said.

Regional demand, on the other hand, is on the recovery, following a typical seasonal lull in the November-December period.

Many end-users were also eager to secure additional volumes to augment their own inventories, partly out of concerns of potential disruptions when their regular ACN suppliers go on maintenance mode.

Spot discussions were thus well-supported across all major Asian markets, despite the reality that February supplies were almost fully sold out.

While the key Chinese market is expected to slow down significantly in the coming week, ahead of the extended Lunar New Year holidays starting from mid-February this year, market participants said that trade discussions could still stay robust in India.

Unlike their Chinese counterpart, downstream acrylic fibre (AF) and acrylonitrile-butadiene-styrene (ABS) makers in India are typically more heavily reliant on ACN imports, given a lack of domestic production capacity.

Import offers into India had already risen sharply in recent week, possibly to the tune of $50-100/tonne.

In the week prior, Indian importers were heard to have paid up to $1,900/tonne CFR India for February-shipment supplies. This is more than 4% higher than the last February trade that closed in late January.

On 2 February, import prices into India were assessed in the $1,840-1,900/tonne CFR India range, ICIS data showed.

But whether Indian buyers could sustain the uptrend remains to be seen. The bulk of ACN goes into the AF sector in India, and AF makers in India said that their margins are severely squeezed as downstream AF pricing failed to keep up with the strong ACN performance.

“I am bleeding,” an Indian AF maker said, adding that if push comes to shove, cutting back operating rates to temper mounting feedstock costs may “well be the only way out”. - ICIS -

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