In this slow down all the major textiles fibers are facing tough times. Acrylic having less share in textiles market against PET, Nylon and Viscose expected to get affected highly. In early 2008 consumption of textile fiber was expected to increase in China by more than 10.5 percent to approx 24 million tons. In Global market consumption of ASF was expected to grow at the rate of 2.3 percent during the 2008 to 2013, but due to recession now it's expected that growth in consumption rate of ASF will check on to 2.0 percent only in this duration and for this main reason would be lack of innovation in usage of ASF. It is still expected that production of ASF will cross 2,500,000 ton during this year but in recession we found that many of the producer still running there plant at approx 50 percent of there name plate capacity. Last year Acrylic fiber business was of US$ 550 Million, which we expect to remain at lower side this year obviously. Last year global production of ASF was approx 2,425,000 tons.
In last year 2007 global Acrylonitrile consumption was increased by more than 8 percent and production increased near by 7 percent. In China market demand of derivatives of ACN like ABS expected to grow at 6.5 percent near by 3.65 million tons. It was noticed that during last year consumption of ACN declined in U.S.A and European region by 6 percent and 17 percent respectively.
Industry experts believe that price reduction in feedstock prices like ACN and Propylene has brought a relief among industry players, but there is a concern over the future market trend. As a precautionary measure they are running plant at lower rate. Speculators still kept their fingers crossed about the market trend. Demand slump is drastic still many of the producers are in hope that season of winter in northern hemisphere will push the consumption of ASF for apparel. While conversation it was clear that apparel market is the sector which could pour boom in upstream market. Automobile industry which was on driving seat for last one quarter will again on back seat and lets wait for the history repeat it self.
Earlier in last quarter price of Acrylonitrile was touched to level of US$ 2175/ton in Asian market in month of August was reduced by 60 percent recently and touched to level of US$ 1300/ton. Price of ASF also increased to US$ 2.54/Kg and returned to level of January 2008 at US$ 2.29/Kg in recent days. Important price rally seen in Propylene where price increased to US$ 1760/ton in the month of July 2008 and take nosedive to US$ 305/ton when I am writing this. In European market price of ASF is reduced to US$ 2/Kg or 1.88/Kg which earlier touched to level of 1.97/Kg. Downstream textile market still aspect more price correction in ASF in near future. On other side ASF producers are confused with market trend as its very difficult to maintain margin. Majority of speculator foresee further 10 percent price slump in ASF price.
Many ASF producers feel that their operation rates are reduced and also confirmed that they have to stop their procurement plans temporarily till the fresh order optimize. Over all ASF plant operation rate was near by 55 percent. The graph below suggests that the price of ASF is still expected to move down would be good news for textiles industry. Speculators opt stance of wait and watch as demand of textiles also went down. Ultimately, the fact that purchasing parity of customer world wide; is reduced is a bitter truth.