The US$550 million acrylic fiber industry has been reporting poor performance over the past few years. Sixty-one producers spread across 56 countries with a little less than 3 million tonnes capacity is facing a severe demand crunch and sharp rise in input cost. In 2007, consumption declined 6% over 2006 while production fell by over 9%.

The predicament was the doubling of prices of acrylonitrile – the major raw material, in the last four years. Product price during the same period was up by 50%-60% implying the inability of the ASF producers to pass-on the rising costs.

Furthermore, ASF producers were seeking alternative for acrylonitrile or diverting to other form of production – particularly - acrylic filament, a precursor to carbon fibre production.

In this scenario, investment is hard to come in the acrylic fibre business. According to YnFx demand for ASF would increase at an annual rate of growth of 2.3% between 2008 and 2013, with demand peaking in 2009. With no major capacity built-up and slow pace on demand would see capacity utilization rising and the reduction in oversupply gap.