Acrylic fibre prices firm but weak raw material may pull them down

Acrylic fibre markets were on the upbeat of late given the solid support from raw material acrylonitrile (ACN) markets and supply shortage, which in turned were lifted by feedstock propylene prices. But, since the long Lunar New Year Holidays, prices were on the downtrend across the chain, with acrylic fibre ASF producers marking prices up and down by controlling production, particularly in China. Nevertheless, with raw material prices going south, the cost support will ease soon pulling down ASF prices in near future.

Acrylic fibre

In the week ended 9 March, ASF prices were raised in India and Taiwan and remained flat in China and Pakistan. In China, fundamentals were sound amid silent market, and downstream yarn makers saw lukewarm activity. Some producers were more active in producing given the intermediate acrylonitrile (ACN) markets on a weak note.

As the intermediate headed south, overall margins in ASF expanded, but producers faced multiple issues, indicating larger pressure. In India, producers raised offers, citing sharp rise in ACN cost over the past few weeks, although they moderated off late. In Pakistan, ASF prices rolled over after they were cut for March last week.

Acrylonitrile

Meanwhile, acrylonitrile markets in Asia were on a weak note as suppliers lowered offers amid mute activities. Demand was also weak as downstream acrylamide makers were running at low rate while ABS prices dipped. ASF suppliers in China were also ran at 66%, with some lines down. Thus, ACN sellers were eager to offload goods expecting further price drop.

In Europe, ACN spot prices were firm following confirmation of a deal in the previous week. Availability issues were outweighing the reduction in feedstock propylene cost and deals remained limited. ACN availability and demand are likely to remain under pressure, with many sellers sold out for months in advance. In US, ACN export prices were assessed steady on the week amid a tight global market. Meanwhile, demand was healthy from downstream amid economic optimism in the US.

Propylene

Propylene prices in Asian markets had a flat run in the week under review, with prices inching up on Tuesday only to give back the same on weekend. Since mid-February, when price softening began after Lunar New year holidays, propylene has been cheaper by more than 3.3% weighed down by poor sentiment and may remain under pressure in the short run amid due to weakness in China’s domestic market.

In Europe, chemical grade propylene (CGP) prices eased somewhat following outages in derivative plants, leading to lesser consumption. However, the CGP market remained relatively tight amid expected rebound in derivative offtake over the first half of the year, supporting spot prices to firm up a bit during the week. In US, CGP spot prices were slightly up as production continued to ramp up corroborated by rebound in demand. Following the February contract price declines, and production increasing in March, downstream demand is expected to increase further soon.

Chemical grade propylene is used in the manufacture of ACN which produces ASF. ASF is a manmade substitute for wool.