Acrylonitrile and Derivatives: Asia Market Upheaval
In mainland China, domestic acrylonitrile market prices continued to trend upward at the beginning of April, driven by reduced supply resulting from technical issues, planned turnarounds, and strategic production cuts. As a result, the overall operating rate dropped below 70% on average in April.
Many suppliers faced customer resistance to high prices; however, producers maintained or even increased listed prices amid reduced supply and high export demand.
In other Asian markets, the acrylonitrile prices increased much faster than mainland China. Some Chinese producers experienced higher export demand, which supported them to run at a relatively high rate. The arbitrage window between mainland China and other parts of Asia is likely to remain open in the near term.
Operations outside of China continue to be curtailed by unplanned production disruptions and restrictions in upstream raw material supply, particularly propylene. Due to ongoing feedstock supply issues in the region, producers focused on meeting domestic demand rather than supplying spot export markets. While some spot exports from these countries were reported, volumes were significantly lower than previously observed. It was also noted that there is a large price difference between spot offers in Northeast Asia, with the lowest offers coming from China in recent weeks.
Notably, on 8 April, the US and Iran announced a two-week ceasefire which caused crude oil markets to slump, even though no immediate conflict resolution followed. The ceasefire and deal negotiations announcements shifted market sentiment, reducing buyers’ willingness to purchase at elevated prices. The bearish sentiment also transmitted to the acrylonitrile market; spot prices began to trend downward around mid-April. In late April, a scheduled turnaround stabilized market prices again after a rapid fall.
Fluctuations aside, the average price of acrylonitrile in mainland China was higher compared to March, and outpaced the feedstock gains, further improving production economics for acrylonitrile.
Regarding the downstream derivatives of acrylonitrile, demand from acrylic fiber sector decreased. The overall demand from the nitrile-butadiene rubber (NBR) sector also dropped as two producers began planned maintenance this month. The total output from the acrylamide sector declined marginally and several small producers cut output amid poor margins; prices fluctuated within a narrow window for the month.
Acrylonitrile-butadiene-styrene (ABS) demand was also lower, as a major producer cut output in the first half of the month, and another shut down for maintenance in the second half. The overall operating rate for ABS dropped below 65% in April, according to industry sources. ABS prices edged up in the first week of the month but fell in the following weeks amid weak demand and lower feedstock costs. Although the average price was lower than last month, the production economics for ABS improved as feedstock costs dropped further.
Kevin Longworth, Executive Director Global Acrylonitrile & Derivatives (Kevin.Longworth@chemicalmarketanalytics.com); Zengwei Yin, Associate Director Acrylonitrile China (Zengwei.Yin@chemicalmarketanalytics.com); David Onyekpe, Principal Analyst Acrylonitrile (David.Onyekpe@chemicalmarketanalytics.com)
