EPCA 2024: ACN sentiment mixed as players consider global conditions

Acrylonitrile market players highlighted mixed sentiment in the sector, speaking during the 58th European Petrochemical Association conference, with many forced to reckon a yearly improvement in market conditions against structural weakness in underlying demand and an uncertain downstream outlook for 2025.

A variety of players from across the global ACN industry attended the event, held in Berlin Oct. 7-10, to negotiate contracts for the year ahead, liaise with value chain participants and discuss key takeaways from the year.

H2 weakness clips general recovery from 2023 lull

Conference attendees generally corroborated improved market fundamentals from a bottoming of both pricing and market demand in 2023, noting consistently stronger buyer appetite across 2024 when compared with the previous year.

“We’ve seen more consistent periods of recovery this year, 30% more sales in the European market,” a source said. “Looking back to 2023, the [2024] sales volumes are good by comparison … demand is not necessarily better, but there is an improvement in downstream pull on supply tightness.”

This increased movement of material was attributed to ongoing disruptions due to Red Sea security tensions, conflict in the Middle East and volatile freight conditions, which have tightened the supply of material in the key derivative acrylonitrile-butadiene-styrene, acrylic fiber and acrylamide segments.

This, in turn, has increased the need for ACN in Europe, allowing domestic producers and suppliers with access to European storage to move more material.

Despite this, sources were quick to stress that underlying market fundamentals remain weak, driven by weak conditions in end-user automotive and construction industries, alongside structural oversupply in both domestic and global markets which continues to dog market conditions.

Such dynamics have been particularly apparent across H2, with sources citing a limited rebound from the European summer holiday slowdown in August as critical in muting market conditions into the early stages of Q4.

"H1 did better than expected for 2024, but H2 is softer, and we expect the same for 2025," one producer said.

ACN spot prices in Northwest Europe have averaged at $1,340/mt CIF ARA in H2 to date, down 3% from H1 and up 22% on the year, according to data from Platts, part of S&P Global Commodity Insights.

Broad indicative pricing spread as spot remains illiquid

Underpinning the weakness in ACN market fundamentals is a broad pricing spread across European ACN spot prices, which has driven bid and offer levels apart and hampered any wholesale shift in spot volume movement across the region.

During EPCA, a broad spot pricing spread was heard in the CIF ARA market, with buyers and distributors indicating levels at $1,300/mt and below while sellers quoted expectations of between $1,400-1,600/mt.

Consumer pricing expectations in the Northwest European market have been driven downwards by competitive trading activity in the Mediterranean, with prices in the region heard as low as $1,100/mt CIF Med from a trader.

Additionally, the presence of distressed Russian and Belarussian offers into the region has exacerbated this bearish pricing trend in consumer bids. While the majority of this material is exported to Turkey, discussions surrounding its pricing level have skewed discussions in mainland Europe, cementing a broad indicative pricing spread from market participants.

Both Russian and Belarussian acrylonitrile have not been sanctioned by the EU following the former country's invasion of Ukraine in February 2022, yet sources have generally played down its consumption by European players in conversations with Commodity Insights due to reputational and ethical concerns.

Sources noted that this divergence in buyer seller pricing expectations has heightened illiquidity in an already muted spot market, with limited deals seen across 2024 as contractual commitments have satiated consumer appetite and cut the need for additional volumes.

Mixed outlook amid contrasting macro-factors

Looking to 2025, market players developed more consensus on the direction of supply and demand fundamentals when compared to the 2023 conference where uncertainty was the dominant trend.

Generally, consistency from the quiet conditions of H2 was expected amidst weak end-user confidence and public spending in Europe, which continue to hamper ACN derivative conditions.

“Conditions across the entire value chain have to improve before we see a shift in conditions” a producer said. “In a [downstream] market such as ABS, consumption is dependent on the general public replacing their white goods and appliances … this only happens every 5 years, and this makes things tricky against the weak economic backdrop.”

Similar concerns were raised with regards to other key end-industry segments like construction and automotive, with recent cuts in interest rates heard not to be sufficient to restimulate purchasing power in these sectors for 2025.

In addition, aggressive Chinese capacity expansion provoked weariness in conference attendee sentiment for both the short and long term, with exponential capacity growth expected to shift trade flows in both domestic and global markets.