Overview of acrylic acid industry development in China

1.1 Development pattern and trend of acrylic acid industry in China

Acrylic acid is at the heart of the industrial chain, and a range of compounds can be derived through chemical processes, resulting in a large range of acrylic acid products. As a result, the acrylic industry chain can be divided into upstream, where petroleum and propylene are used as raw materials, and downstream, where the acrylic and ester industries mainly include specialty acrylics, lotions, water treatment agents, widely used in coatings, adhesives, synthetic rubber, textiles, chemical fibers, building materials and other areas.

From the perspective of market operation in 2018-2022, prices are mainly affected by the operation of domestic and foreign equipment, changes in downstream demand, and the mindset of market merchants. Our country has become the world's leading consumer and producer of acrylic acid and esters. Dependence tends to decline as new projects come on stream.2023-2026 remains the peak year for acrylic equipment construction, with no let-up in the industry's expansion heat.

Between 2023 and 2027, a total of 1.655 million tons of acrylic acid products are expected to come on stream from seven new Chinese enterprises, including large-scale refining and chemical integration projects.Due to the large scale of investment, complete industrial chain, its cost advantage is obvious, coupled with mature management and channel construction, profit cyclical strong, they have a relative advantage in the chain of each link of the cost and price, is expected to 2023-2027 China acrylic products industry pattern will also produce significant changes.

1.2 Current development characteristics of acrylic acid industry in China

Investment in the Chinese acrylic acid market has not decreased and upstream and downstream integration remains the main driving force for the development of the industry. With the release of upstream and downstream integration equipment, domestic acrylic acid capacity and output are growing in tandem and the CR5 capacity ratio remains high. The average annual compound growth rate of acrylic capacity from 2018 to 2022 is assumed to be 0.35 percent, without accounting for capacity withdrawals.

1.3 Development environment analysis of acrylic acid industry in China

Crude oil prices have shown dramatic swings. Oil prices will remain high and volatile in 2022 due to multiple factors including macro, fundamentals and international politics. The volatility of crude oil prices in 2022 is further exacerbated by the uncertain direction and declining liquidity. In addition, the Federal Reserve's stance continues to be hawkish and domestic inflation pressures have not abated, which remains the Fed's main rhetoric for continuing to raise interest rates. The global economic recovery as a whole is under pressure, coupled with ongoing geopolitical conflicts and energy supply shortages in most countries and regions, and policy disruptions to prices have outpaced product fundamentals for some time. In addition, domestic demand growth slowed in 2022, but the supply side as a whole remained relatively loose, with profit losses and broad shocks for most chemicals, including acrylics, the most common scenario.

With the implementation of the 14th Five-Year Plan Guide for the Petrochemical and Chemical Industry, higher demands have been made for the future development of the industry. Although the integrated capabilities of our petrochemical and chemical industries have been promoted so far, the level of industrial balance is not enough. The "14th Five-Year Plan" development of the industry is still centered on reinforcing weak areas, and the main line is to adjust the structure and promote upgrading. While for the petrochemical industry, including acrylics, promoting structural adjustment and transformation and upgrading remains a top priority, it will also guide the downstream industry to achieve high-end transformation.