February ACN prices to rise to US$2000/ton in Asia

19-Jan-10

Acrylonitrile (ACN) prices in Asia are poised to rise to US$2000/ton in February triggered by a supply crunch, strong demand from China and rising feedstock propylene costs, as per ICIS. Spot offers for next month surged by almost US$200 since mid December to US$2000-2100/ton CFR, as supply was constrained by a flurry of plant turnarounds in Asia and outages in Europe. Several ACN plants in Asia, including Japan’s Asahi Kasei, South Korea’s Taekwang Industrial and Taiwan’s China Petrochemical Development Corporation (CPDC) have limited spot availability due to a heavy turnaround schedule in the first four months of 2010. Taekwang’s 250,000 tpa ACN plant in Ulsan will be shut for maintenance for 3 weeks from 20 February until 10 March while Asahi Kasei will shut its 300,000 tpa plant at Mizushima from early March to mid-April for maintenance, and CPDC will turn around its 190,000 tpa ACN plant in Kaohsiung in early April. In Europe, a cracker outage in December at Cologne has led major petrochemical producer INEOS Olefins and Polymers, to declare force majeure on ACN supplies at its 300,000 tpa plant at the site last week. Other factors affecting supplies from Europe include recent production issues at Lukoil’s 150,000 tpa ACN facility in Saratov, Russia and at INEOS’s other 230,000 tpa ACN plant at Sealsands in the UK. These supply issues have been accompanied by robust demand from China where domestic ACN prices have risen to CNY 17000-17500/ton (US$2489-2562/ton), up CNY 2000/ton since mid-December, as Chinese traders stock up on inventories ahead of the Lunar New Year holidays. China will be shut for 7-10 days from February 14 for the Lunar New Year festivities. Apart from Asia, Chinese traders also source from the US and Latin America. Over 15,000 tons of deep-sea ACN from the US, Mexico and Brazil are expected to head towards China in January and February, but fresh deep-sea cargoes are likely to command higher prices, in line with rising feedstock propylene costs. US January contracts for chemical grade propylene settled 3 cents/lb higher at 55.50 cents/lb, which will add over US$70/ton to the ACN production cost.