US acrylonitrile (ACN) supply is expected to remain tight in the second half of 2019, following the unexpected shutdown and associated force majeure at INEOS Nitrile's Green Lake, Texas, plant earlier this year.
Although a company source confirmed INEOS Nitriles will restart its Green Lake ACN plant in mid-July, the plant will remain on force majeure until the supply chain is stabilised.
Production is otherwise expected to improve following the end of Ascend’s turnaround on the AN3 unit at its Chocolate Bayou, Texas, plant in mid-June as well as increased operating rates at Cornerstone’s Frontier, Louisiana, plant following its turnaround in March.
Severe supply tightness in the global market stemming primarily from the Green Lake outage drove global spot export ACN prices to near record levels in the first half of the year, squeezing margins for downstream acrylic fibres (AF) and, more recently, acrylonitrile-butadiene-styrene (ABS) producers, particularly in the key China market.
As a result AF and ABS operating rates have steadily decreased and are expected to continue to do so in the third quarter. Demand for other end sectors such as nylon, carbon fibre and acrylamide remains strong.
While some market sources are optimistic that improved weather and lower US interest rates will lead to increased demand from the construction and automotive sectors in the third quarter, tight supply is expected to outstrip changes in demand in the near- to medium term. That said, AF operating rates are expected to continue to decrease until ACN supply improves and prices stabilise.
In addition, US ABS supply is ample. Decreasing production in Asia stemming from tight supply could put downward pressure on pricing but is unlikely to outweigh tight supply conditions until INEOS comes back on line at Green Lake.
Asia ACN prices fell in early June for the first time since mid-January, weighed down by weak performance of downstream markets. However, limited supply stemming from scheduled shutdowns of regional plants continues to support an uptrend in prices.
INEOS announced plans to make its first investment in the Middle East, including a that will be the first of its kind in the region when it starts in 2025.
Cornerstone is also expected to reach a final investment decision (FID) on a new 130,000 tonne/year ACN train in the US later this year. The plant is expected to begin commercial production in 2023.
ACN is used in the production of synthetic fibres for clothing and home furnishings, engineering plastics and elastomers.
Major ACN producers in the US include Ascend Performance Materials, Cornerstone Chemical and INEOS Nitriles.