SINGAPORE (ICIS)--Spot acrylonitrile (ACN) prices in Asia are likely to rise further in January on the back of soaring feedstock propylene costs despite the seasonally slow demand in the first quarter, industry sources said on Monday.
“The feedstock propylene costs are going up in Europe and in the US, which means higher prices for deep-sea ACN cargoes into Asia,” a northeast Asian producer said.
“We anticipate ACN spot prices to rise to above $2,400/tonne (€1,800/tonne) in the first quarter due to the rising feedstock propylene costs,” he added.
The ACN spot market had been on an uptrend in 2010, with prices up by 25% to $2,300-2,350/tonne CFR (cost & freight) northeast (NE) Asia in December, from $1,850-1,900/tonne CFR NE Asia in early January 2010, according to ICIS. (Please see graph below)
China and India are major importers of ACN, a raw material used by downstream acrylic fibre (AF) and acrylonitrile- butadiene - styrene (ABS) producers in those countries.
China imported 24,000 tonnes of ACN from the US in November 2010, which comprises about 46% of China’s total monthly imports, according to data from China Customs.
India imports around 10,000 tonnes of ACN each month.
China and India are major buyers of deep-sea ACN cargoes from Europe and the US.
Thus, higher feedstock propylene costs in Europe and the US would raise ACN import prices in Asia, traders said.
With the US feedstock propylene costs likely to go up in January by 20-25% from December, given January 2011 contract nominations of 14.50 cents/lb ($320/tonne) and 15 cents/lb, buyers in China and India are expected to cough up more for deep-sea ACN imports.
US December chemical-grade propylene (CGP) contracts were at 59 cents/lb, while spot CGP prices were assessed at 67.50-68.75 cents/lb in the week ending 24 December 2010.
In Europe, January propylene contracts rose by 11.5% or €110/tonne ($147/tonne) to a record €1,070/tonne on the back of a tighter-than-expected propylene supply and demand balance.
“The main factor for higher ACN prices in the first quarter of 2011 will be cost driven rather than demand driven,” a supplier said.
