Spot ACN prices have tumbled by more than $1,000/tonne (€720/tonne) from early May to $1,700-1,750/tonne CFR (cost and freight) northeast (NE) Asia in the week ended 21 October, ICIS data showed.
Regional ACN producers such as Asahi Kasei in Japan, Tongsuh Petrochemical in South Korea and Formosa Plastics Corp in Taiwan are currently running their plants at about 80% of capacity, industry sources said.
“We will continue to run at about 80% of our total production capacities at our plants in Japan and South Korea until demand recovers,” said a company source at Asahi Kasei.
Asahi Kasei can produce a total of 765,000 tonnes/year of ACN at its plants in South Korea and Japan. Its fully-owned subsidiary, Tongsuh Petrochemical has an ACN capacity of 315,000 tonne/year at Ulsan in South Korea, while its other two plants at Kawasaki and Mizushima in Japan have a combined capacity of 450,000 tonnes/year.
In China, Jilin Petrochemical has shut down two lines in Jilin that each have 106,000 tonne/year capacity. One line was shut in early October, with no firm date when the unit will resume production, a source at the company said. The other line has been shut since April.
Jilin has two other ACN lines, each with a capacity of 120,000 tonnes/year at the same site, that are running at normal rates.
In Taiwan, China Petrochemical Development Corp (CPDC) has brought forward a 40-day turnaround at one of its two ACN lines in Kaohsiung to early October from its original date in November because of the current weak prices, a company source said.
CPDC produces 95,000 tonnes/year at the unit but is planning to expand it by 25,000 tonnes/year. The company also plans to shut its second 120,000 tonne/year ACN line at the site for 30-40 days of maintenance in late October.
“We are near the bottom [ACN] price now as demand from the derivative acrylic fibre (AF) producers is stable and when there is less ACN supply, given the production cutbacks, prices will stabilise and rebound,” an industry source said.
Weak demand and the availability of deep-sea cargoes from the US Gulf and Europe have pressured ACN prices to plunge from a high of $2,850/tonne CFR NE Asia recorded in May, industry sources said.
“Demand for ACN has been very weak, in particular from the downstream acrylonitrile-butadiene-styrene (ABS) makers because of the poor macro-economic outlook,” a trader said.
ABS is a raw material used in the production of a wide range of finished consumer products, including toys, household appliances and office equipment.
Europe’s ongoing debt crisis and the US’ faltering economy heavily weighed down on sentiment in Asia, as troubles in these Western economies meant weaker exports for the region. Asian economies, including China, Japan, South Korea and Taiwan are export-oriented economies that count Europe and the US as their major markets.
In recent months, a number of downstream ABS makers in China have been operating plants at significantly reduced rates of about 50%. In South Korea, Taiwan and Japan, ABS plants have been running at about 65% of capacity, thus crimping demand for ACN, industry sources said.
“Although demand has weakened, the bearish sentiment is a major factor driving ACN prices downwards more than expected,” an industry source said.
Further fuelling the price downtrend are ACN cargoes of Europe and US origin flowing to China and India in recent weeks, traders said.
($1 = €0.72)
