Acrylic fibre enjoy good margins as feedstock squeeze
Acrylic fibre, an alternate development to substitute wool, has been enjoying expansion in margin since the beginning of 2019. In July, the cost margin climbed to 138% of acrylonitrile cost in Asian markets. It had averaged 142% in December 2018 and was at 118% in July 2018. The average price of 1.5-3.0D acrylic fibre was US$2.18 a kg FOB Taiwan, while acrylonitrile cost was US$1.58 per kg CFR Fareast Asia. The same in December was US$2.20 per kg FOB Taiwan and US$1.55 a kg CFR Fareast Asia. Year on year comparison shows that acrylic fibre prices declined 16% while acrylonitrile was cheaper by 28%. Rapidly falling acrylonitrile cost and slower fall in acrylic fibre prices widened the margins, to an eight month high in July.
However, demand was stable to weak for acrylic fibre since the beginning of 2019. Prices crashed in January which slowly recovered by June, but again retreated rather sharply in July. Producers reportedly reduced operating rates, first to cut down inventory and later to create supply shortage to some extent. This resulted in lesser demand for acrylonitrile off late and prices started tumbling. Prices declined from an average of US$2 a kg in May to US$1.58 a kg in July. They were also far below the 12-month peak of US$2.24 a kg hit in September last year. The other outlet for acrylonitrile were also showing signs of weakening which further depressed market sentiments. Acrylamide suppliers were running at just 70% while ABS market also extended weakness, presenting a steady demand for acrylonitrile. Acrylic fibre makers were operating at less than 60% reflecting weak demand for the intermediate.
Propylene, feedstock for acrylonitrile, has been lesser influenced by acrylonitrile markets and prices appear to have shifted to polypropylene markets. Polypropylene demand being seasonal in nature it has ability to drive propylene prices during its peak demand season. Propylene supply has been sufficient across Asia, Europe and US. Similar, acrylonitrile supply has come back from severe shortages seen in Q4 of 2018.
Source: Global Markets Weekly Review
