Acrylic Fibers: Prices Soar for First Time in 10 Years

Acrylic fibers have entered a phase of a steep rise for the first time since 1995. Rising prices last year maintained their upward momentum. In the prevailing environment, however, it is difficult to increase finished products prices.

This report covers acrylic fibers and Modacrylic fibers, with special emphasis on acrylic fibers. Acrylic fibers are a fiber composed of long-chain synthetic polymers including at least 85% by weight of a repeating unit of acrylonitrile groups. Modacrylic fibers are a fiber composed of long-chain synthetic polymers including at least 35%, but less than 85% by weight of a repeating unit of acrylonitrile groups. Acrylonitrile-based fibers are a fiber composed of long-chain synthetic polymers with constituent units of acrylic acid, acrylic sodium and acrylonitrile crosslinked copolymer.

As of January 2004, acrylic fibers were on the price level of US$1.45/kg. Usually, acrylic fiber market prices have subsequently moved down toward February because of two factors: slow business among Chinese firms due to the Chinese Lunar New Year and the poor demand season arising from the seasonal change.

The year 2004, however, was exceptional and acrylic fiber market prices began to move up. Buyers concerned with higher prices in the future have purchased increasingly in confusion. This is because acrylonitrile (AN) prices started to rise. Later, AN prices rose to US$850/ton CFR (cost, freight) base in January 2004. Then, these prices reached US$1,030 in April and US$1,280 in September. Then, the price level of about US$1,300 continued from October 2004 to March 2005. Acrylic fiber market prices rose from US$1.45 in January 2004 to US$1.60 in March and then advanced to US$1.80 in September. These prices vary from dealer to dealer and the prices given here are only a general example.

Toyohiro Sunayama, Manager, Textile Raw Material Section, Textile Company, Itochu Corporation said in May at the time of covering this report, "In April, we could consummate the business at US$2. Then, in May, prices have moved down slightly to the US$1.90-level."

Toyohiro Sunayama, Manager, Textile Raw Material Section, Textile Company, Itochu Corporation

Business Temporarily at Standstill

With the start of May, the market entered into the demand season as far as the seasonal factor is concerned. The buying intentions should be strong. Even so, prices have gone up too high from the viewpoint of users. Major producers asked for US$2.10 in May, but producers' terms were not acceptable and no business was materialized.

Briefly, the business was quiet in May. This is because it is thought that users desired to have prices below US$1.90. Nevertheless, the price asked by producers was reasonable. The reason is as follows: AN prices of US$l,400/ton are converted into US$1.40/kg.

With the addition of a 70 cent spread including wages and profits, producers' prices will turn out to be US$2.10.

This market situation with the business moving just before US$2.00 and producers quoting US$2.10 is for the first time since 1995. In 1995, there was a time when US$2.30 was the highest price. But, that did not last long. So this year is the first time that acrylic fiber prices have been on an uptrend for such a long time since January 2004 and acrylic fiber prices have continued to stay at the US$1.90-level for long. Compared with 1995, this year shows a stronger sense of market tendency.

Chinese Demand

The Chinese demand for acrylics was 1.12 million tons in 2004. The production centering around seven major producers was 660,000 tons. In addition, imports were 460,000 tons. The demand was up 3% from a year earlier. Since the average annual growth rate in 2001- 2004 was 7.5%, it is understandable that the demand in 2004 was considerably poor. After all, it appears that this is the case of the expansion of demand being pushed back under the influence of steeply climbing acrylic fiber prices.

Japan Exlan

Announcement of "Ginsekai"

Toyoaki Yamada, General Manager, Exlan Sales Division

Japan Exlan Co., Ltd.

For its acrylic fiber sales in 2004, Japan Exlan Co., Ltd. reported profits for the first half, losses for the second half and losses on an annual basis. On the company-wide basis, the company posted profits for the whole-yearly period. This means that soaring AN prices since the summer 2004 affected the company's acrylic fiber sales adversely to such an extent. In order to avoid the effect of worsening profitability, the company has continued to place particular emphasis on the marketing of sophisticated acrylic staple for quite some time.

According to Toyoaki Yamada, General Manager, Exlan Sales Division, the sophistication ratio was 70% for 2003 on a volume basis. Half of its sophisticated staple is flat-type staple. This is used for fake fur. This fake fur stalled in 2004 under the influence of an overstock of final products. Consequently, the company's sophistication ratio fell to 60% in 2004. The company's annual output is 63,000 tons. 70% of the output goes to blankets and carpets.

The company has created sophisticated acrylic fibers one after another. Now a hot topic is "Ginsekai". This is an acrylate fiber with antibacterial and deodorizing functions. "Ginsekai" employs photocatalytic technology. It is suitable for hosiery and bath mats.

"Airpearl" was developed as an ideal material for blankets. The annual output for this year is 50 tons. This was made by combining antibacterial acrylic fiber "Aqua" and "Bemberg (Cupro)". So far all blankets have been 100% acrylic or 100% cotton. :Airpearl" is entirely different from these blankets.

"Inexit" is an acrylate/rayon blended spring/summer material with the function of releasing heat when hot.

This item has improved the existing rate of moisture absorption.

"Type H" has gained high evaluations in sweater applications because it is capable of making one bath dyeing of acid dye and cationic dye.

Mitsubishi Rayon

Producing 500,000 Tons in Ningbo in October

Koichi Kobayashi, General Manager, Acrylic Fibers Division, Director, Acrylic Fibers Department I. Mitsubishi Rayon Co., Ltd.

In October 2005, Mitsubishi Rayon Cov Ltd. is going to start operating Ningbo Rayon Acrylic Fibers Co., Ltd. With an annual production capacity of 50,000 tons. Its location is Qingzhi Park Ningbo Economic & Technical Development Zone, Beilun Ningbo, Zhejiang, China. "This action is to meet China's active demand for acrylic fibers," says Koichi Kobayashi, General Manager, Acrylic Fibers Division, Director, Acrylic Fibers Department 1. The demand for acrylic fibers in China concentrates in three areas: Zhejiang province, Jiangsu province and Shanghai. The company's factory is situated in the best location. The company has a plan to expand the production capacity to 100,000 tons in 2008.

In Japan, Mitsubishi Rayon produces 130,000 tons annually. The product lines are wet-type acrylic "Vonnel" and acrylic filament "Silpalon" (annual output: 2,000 tons) and acrylic man-made leather "Glore" (annual output: 2 million sq. meters). The company stopped the production of "Finel" in September 2004.

Good colors peculiar to acrylics and softness characterize "Glore". "Glore" can display its characteristics, compared with other producers' manmade leather made of polyester. Of the 130,000 tons of acrylic production at Mitsubishi Rayon, 65,000 tons are for export to China. Export destinations after China are Indonesia, Thailand and Korea.

P.T. Vonex Indonesia, a group firm in Indonesia, is going to shrink its production capacity. With 55,000 spindles, Vonex produces 15,000 tons annually. Of the output in Indonesia, 40% was for shipment to Japan, but this figure has fallen to 20%.Vonex was established in 1975 with its initial aim to sell acrylic yarn in the Indonesian domestic market and yarn to Hong Kong. Then, with plant expansion in the 1990s, the company achieved good results in selling to Japan. Nevertheless, its role appears to have ended. Yarn sales will be the main business in the future, but its scale will be reduced.

Group firm in Qingdao, China has 12,000 spindles and produces 4,000 tons annually.

Toray

Building New Commercial Distribution for Sweater

Toray Industries, Inc. is making progress in creating new acrylic commercial distribution for final products such as sweaters, jerseys and hosiery. The company's acrylic brand is "Toraylon". Toshihiko Ando, General Manager, Staple Fibers Department says, "Last year, our business partners were dealers in Japan. But, this year, we have expanded our activities and we are building up new commercial distribution for overseas customers." The company has proposed Toray's sophisticated acrylic materials to its business partners such as product converters in Hong Kong capable of making a decision on materials. The point of the company's business for this year is how well the company can meet such outside demand. For example, jerseys made of acrylic/rayon blended materials that effectively utilize softness have received favorable evaluations.

Toshihiko Ando, General Manager, Staple Fibers Department

Toray Industries, Inc.

Of acrylic staple the company produces in Japan, 85% is reportedly a sophisticated type as far as the number of product categories is concerned. The acrylic production at Toray (Japan) is 2,200 ton/month or 26,400 ton/year.

Kaneka

"Kanecaron" With Self-Extinguishing Function

Kaneka Corporation produces and markets 50,000 tons of modacrylic fiber "Kanecaron" annuall/y. The global modacrylic fiber production last year was 80,000 tons. Subsequently, however, both giant producers discontinued their modacrylic production. These two producers are Kanebo (the output: 15,000 ton/year) and the SoIutia group firm (the output: 5,000 tons). As a result, the production volume of modacrylic fibers has fallen from the previous 80,000 tons to 60,000 tons now.

When the supply is squeezed that much, it is only natural that selling prices should rise; however, this is not what is happening today. This phenomenon signifies the withdrawal of these modacrylic fiber producers in response to the continued stagnation demand. The contributing factors are the advancement of quality by means of flame-retardant finishings, along with the substitution of demand by polyester. This is an erosion of the application that used to be the domain of modacrylic fibers. As already mentioned, acrylonitrile prices skyrocketed last year. Modacrylic fiber prices also suffered from rising costs. In the case of modacrylic fibers, however, these costs did not rise as in the case of acrylic fibers because modacrylic fibers use less acrylonitrile.

Koichi Nakamura, Group 1 & Marketing Group III, Kanecaron Division explains the marketing system for "Kanecaron" as follows: Marketing Groups are divided into three, I, II and III. Group 1 is responsible for pile woven fabrics, stuffed toys, carpets and modacrylic fibers for apparel. Group II markets head decorations and wig hair, while Group III modacrylic fibers are for curtains and blankets. Kaneka is in the process of shifting to higher-value- added products in diversified sectors, According to Nakamura, the company was able to pass on to product prices a half of the cost- push portion resulting from rising acrylic fiber process, while managing to take care of the other half by means of self-effort and cost reductions.

"Kanecaron" exhibits self-extinguishing performance. This is an important textile material for users with special emphasis on safety. It offers merits when used for textile products such as curtains and blankets, which should not flare up in flame for safety. Blankets used for disaster relief and lap robes for airline passengers require flame retardant property. In the future, the development of applications will make progress in industrial filters as well. Of its annual output of 50,000 tons, Kaneka exports 95%. Of these exports, 70% is for U.S. customers (final customer basis). In most cases, products are actually made in China.

Koichi Nakamura, Group 1 & Marketing Group III, Kanecaron Division

Kaneka Corporation

In the fall of 2004, Kaneka exhibited for the first time at Intertextile Shanghai (Home Textile). The company considers as its priority the development of business activities in China. Kaneka aims at applications of upholstering and special fabrics for work wear. The company plans 1.000 ton/year of exports to the U.S. for mattress applications for fiscal 2005. This is in response to the enforcement in January 2005 of the Technical Bulletin 603 (TB 603), the sate law of California that stipulates a new flame retardant standard on mattresses. In order to satisfy the requirements of this state law, it is necessary to use nonwovens made of flame-retardant fibers between urethane foam and case. "Kanecaron" has gained acceptance as one of these materials and the company is supplying "Kanecaron" to more than three nonwovens producers. The blending ratio of these materials is 10-40% in the case of "Kanecaron".