Review of supply and demand pattern of acrylic acid industry in China

1 Correlation analysis between acrylic acid price and supply and demand data in China during 2018-2022

The average annual change in output was 5.64 percent, in apparent consumption 6.10 percent and in prices 7.79 percent. The specific performance is as follows: In 2018-2022, China's acrylic output shows an overall growth trend. Industry operating rates rose as new capacity was released. Production slowed from 2017 in the second half of 2018 due to centralized maintenance of the equipment. However, in the following half-year, new production capacity was put into full operation and market production increased significantly. No new domestic acrylic production capacity in 2020, due to the new production capacity at the end of 2019, fully reflected in 2020, due to the outbreak of public health events at home and abroad, resulting in low domestic construction in the first half of the year, low production for 2020 compared with 2019 growth of 100,000 tons. In 2021, domestic dual control energy efficiency and power limitation problems led to reduced domestic operations, in addition to the centralized failure of foreign equipment affected by the cold snap. Backed by high prices and high profits, its 2021 production will increase by nearly 200,000 tons compared with 2020 production. In 2022, subject to the recovery of foreign installations and the high price of acrylic acid in China, the compression of users' own profits and the downstream cost transfer due to the light end demand is not smooth, the output is increased compared with 2021, and the price is reduced compared with 2021. According to Longzhong's statistics, the average annual production capacity for 2018 to 2022 is 3.4 million tons, the average production volume is 2.17 million tons, the average apparent demand is 2.142 million tons and the average price is 9,206 yuan per ton. In terms of value in 2022, it is 95,000 tons higher, respectively. 283,000 tons, 189,000 tons and 2,153 yuan per ton.

2 Acrylic acid supply pattern and trend analysis in China from 2018 to 2022

In 2022, China will have a total capacity of 3.5 million tons of acrylic acid, with only one acrylic acid plant, Tengda in Qixiang, Shandong province, operating with an annual capacity of 80,000 tons. With the addition of acrylic acid plants in Shandong, East China has gradually increased its share of capacity and become a major supplier to the acrylic acid market. From 2018 to 2022, there was no current production capacity in Northeast China, and the ratio of its production capacity to the total domestic production capacity declined slowly along with the expansion of different regions, with an average of 2.49% in 5 years and 1.78% in 2022, lower than the annual average. Thanks to large capacity and a large number of acrylic plants, supported by investment and construction of modern plants, East China's capacity in 2022 is 92 percent of the total national capacity, which is also higher than the five-year average of 89.52 percent. In northwest China, similar to northeast China, no new plants and production capacity have emerged in the past five years. Capacity in 2022 is 1.78 percent, below the five-year average of 2.28 percent. South China's share in 2022 was 4.44 percent, also below the five-year average of 5.71 percent, as no new capacity was put into construction.

East China maintained its top position in acrylic capacity, accounting for 92 percent of China's total capacity for distributed devices, with Zhejiang Satellite, Ningbo Formosa Plastics, Yangzi BASF, Shanghai Huayi, Taixing Shengke and other large-scale enterprises located in East China. The capacity of the CR5 plant is 60.86 percent of the national total, all of which belongs to East China.Of these, satellite chemicals account for approximately 20 percent, ranking first.Taixing Shengke ranked second in capacity with 13.71 percent.The second largest region in terms of capacity is South China, with 4.44 percent.With the construction of an 80,000-ton acrylic acid plant at Qixiang Tengda in October 2022, the proportion of acrylic capacity in Shandong has increased and market attention has continued to improve.

The proportion of Shandong in East China is also slowly rising due to the concentration of factories in Shandong and the emergence of modern production capacity. In 2022, Shandong will have a total capacity of 710,000 tons, accounting for 22.61 percent of East China and 20.29 percent of the country. The companies in the Shandong region are: Yantai Wanhua, Kaitai Industry, Shandong Hongxin and Qixiang Tengda.

With the completion of the 80,000-ton acrylic acid plant at Qixiang Tengda, the total national capacity of acrylic acid will reach 3.5 million tons in 2022, it said. With the expansion of acrylic capacity in Shandong, the proportion of acrylic capacity in East China has steadily increased, with 22.61 percent of the 2022 capacity above the five-year annual average for 2018-2022. Jiangsu has five acrylic factories, accounting for 35.99 percent of the total capacity in East China. Zhejiang has two acrylic factories, accounting for 31.12 percent of the total capacity in East China.  Shanghai, which has only one plant, Shanghai Huayi, accounted for 10.19 percent of the 2022 capacity in East China, still higher than the five-year average.

In 2022, its demand was slightly insufficient due to environmental impacts, but this did not affect the overall performance of acrylic during the year.Production increased by 172,000 tons to 2.46 million tons and industrial loads increased by 77 percent compared to 2021, both higher than the 2021-2022 average of 2.37 million tons and 71.91 percent.Overall production in the last quarter of 2022 remained relatively strong, and capacity utilization was also running at a high level of 80 percent in the same period. Later, trading volumes for acrylic manufacturers declined significantly as a result of continued light end demand and repeated epidemics in many places, including Shanghai.The lack of user load also led to increased pressure on acrylic sales.Overall sales in the second quarter did not improve significantly, despite some acrylic plant equipment maintenance that resulted in a decline in overall capacity utilization during the period.Acrylic acid production in the third quarter is larger, the output reached 216,000 tons in August, which is higher than the average monthly output of 200,000 tons in 2022, but because of the continued off-season consumption and the continued reduction of end users, making acrylic acid and ester businesses around the state of mind continues to weaken. While the market has had a few brief months of improvement, overall performance has been relatively flat.Production also rose to a new high in October, with a possible value of 229,400 tons and a capacity utilization rate of more than 77 percent, according to Lonzhong statistics.On the one hand, because of the expected arrival of "nine gold and ten silver", on the other hand, acrylic acid in the second quarter after a substantial reduction, its price value has been close to the low level of the annual average in 2018-2022, on the other hand, acrylic acid factories, especially the East China factory after a relatively concentrated overhaul in September, October equipment resumed production. A guarantee was also given for the production of acrylic during the month. However, as the end of the year is approaching and the expected enhancement of current factory construction, as acrylic acid users, the demand for the whole year in 2022 to maintain just demand, some tiny and medium-sized enterprise load continues to be low, the trend of acrylic acid and demand support strength is insufficient, or the fourth quarter of the overall output and capacity utilization of low. According to Longzhong statistics, the average monthly production of acrylic in 2022, 204,800 tons, fluctuates around the capacity utilization level of 71 percent.

China's acrylic acid production increased steadily in 2018-2022, with an average annual production of 2.17 million tons over the five-year period and 2.46 million tons in 2022, compared with 172,000 tons in 2021 and 283,000 tons in 2018-2022, it said. This is even higher than the annual production of almost 500,000 tons in 2018. At the same time, the capacity utilization rate of the acrylic industry also maintained a steady improvement. Capacity utilization for 2022 was 77 percent, 10 percentage points higher than 2021 and 1.83 percent higher than the five-year average for 2018-2022. It can be seen that the acrylic industry continues to expand.

China's acrylic industry has been expanding continuously during the 2018-2022 period, resulting in a large change in the capacity ratio per plant.Taking 2022 as an example, the capacity ratio of most enterprises decreased compared to the five-year average, but the ratio of Satellite Chemical and Shanghai Huayi still improved compared to the five-year average, with their values 2.47 percent and 0.55 percent above the five-year average, respectively.But compared with 2021, the capacity of domestic acrylic enterprises has declined to varying degrees as the acrylic industry continues to expand its capacity, but the capacity-to-CR5 ratio remains at the 60 percent level.

3 Analysis of acrylic acid industry consumption and change trend in China from 2018 to 2022

Of the major application areas of acrylic, the consumption of general acrylic is the largest, followed by the SAP field. The downstream demand for acrylics in 2018-2022 has also developed to varying degrees, with more pronounced growth in the past five years for both acrylic-supporting esters and fine acrylics. In 2022, while acrylate remains the largest demand for acrylic, its share of demand is 2.5% lower than in 2021, to 55%. Acrylic acid, particularly downstream SAP demand, increased after experiencing light demand in 2022 from both overseas and domestic markets, although the timing of these two aspects of demand did not effectively carry over to the full year, but SAP demand increased over 2021 and subsequently acrylic demand increased. Acrylic in the water reducing agent demand is due to its own price continuing to high, continued compression of downstream users of their own profits, as well as infrastructure due to the capital chain tension and repeated domestic epidemic and other factors affecting the start of the overall limited, from the water reducing agent demand to remain relatively weak situation.

Publicly available statistics show that acrylic apparent consumption averaged 193,900 metric tons per month in 2022 and 224,500 metric tons per month in the first quarter, then slowed and continued to decrease as downstream products, especially the acrylic ester market, continued to be weak and the market mentality changed. And for the second half of the "gold nine silver ten" demand season and the entire fourth quarter acrylic apparent consumption performance, market participants in the first half of the year under the influence of the market, on the afternoon gradually increased divergent views, most estimates for the second half of the month average consumption in 17-185,000 tons.

In the period 2018-2022, consumption of acrylic acid continues to grow despite the closure of some plants, due to the simultaneous release of new production capacity for major downstream acrylic esters.Longzhong statistics showed that the average compound growth rate of China's apparent consumption of acrylic acid in 2018-2022 was 6.1 percent, with an average annual apparent consumption of 2,134 million tons. Apparent consumption in 2022 rose by nearly 190,000 tons to 2.33 million tons.Due to the impact of the domestic and international environment and the mindset of the end users, the apparent consumption in 2022 is little changed from the 2021 consumption and is basically flat.However, demand for acrylics is expected to maintain its growth in 2018-2022 thanks to the expansion of downstream products of acrylics in the domestic market and a partial increase in demand.

Compared with 2021, the consumption structure of acrylics in 2022 showed little change, with acrylic esters accounting for the largest proportion, followed by acrylics and water reducing agents at 55 percent, 28 percent and 9.8 percent, respectively.In addition, the first-half performance was more pronounced in favor of acrylic demand due to the relative preference for acrylates and fine acrylics in the first quarter.In the second half of the year, demand for acrylic in the next half of 2022 will remain light and stagnant. Fine acrylic demand remains dominated by SAP and oilfield water treatment, with other aspects of demand narrower than in earlier periods.

With the steady growth of acrylic consumption, the excess capacity is gradually being absorbed, prompting the acrylic industry to open the capacity expansion window again, and its consumption-to-demand ratio is slowly changing.What to watch out for: SAP aspect of fine acid: As the domestic economy continues to develop and the country's consumption concept changes, the demand for sanitary products in the industry remains stable.At present, the national "three-child" policy has been fully liberalized and baby diapers are becoming ultra-thin. Demand for high-quality SAP products is increasing, and there is still a lot of room for growth in the domestic SAP market. SAP manufacturers are mainly concentrated in East China, which will account for as much as 94.5 percent of SAP production capacity in 2022. Central China, North China and South China will also be allocated 3.5 percent, 1.1 percent and 0.9 percent, respectively.

Polycarboxylic acid superplasticizers: Polycarboxylic acid superplasticizers are currently required for large-scale high-speed railway construction in China; meanwhile, polycarboxylic acid water reduction agents are also used in many large-scale projects in China.

Acetic acid is one of the raw materials used in the production of polycarboxylic acid water reducing agents. From a long-term perspective, this is related to the five-year plan for national highway construction, and from a short-term perspective, it is directly related to the progress of investment in highway construction and the commencement of phase projects. However, from a highway construction perspective, given the limited investment in traditional infrastructure and the relatively high price of acrylic compared to other raw materials, its overall use is limited and the growth rate of demand slowed in 2018.

Acrylic demand is more widespread.The main demand is still around East and South China, but customer demand is not the same.In the case of acrylates, since most acrylates are intended to follow the acrylic support establishment, the main area of consumption is still concentrated in East and South China, especially as the proportion of factories in East China increases, involving products not only butyl acrylates, but also more isooctyl acrylates, methyl ethyl acrylates.SAP is concentrated in the Shandong, Jiangsu, Zhejiang and Fujian regions.East China's overall demand accounted for 81.4 percent of the total, according to incomplete statistics.

In terms of acrylic consumption structure by region, East China consumed more than 1.8 million tons of acrylic in 2022, the largest proportion. As Northwest China has fewer downstream consumer enterprises, it will consume less than 100,000 tons of acrylic in 2022, a small percentage. In 2022, East China will account for 81.4 percent of consumption and Northwest China will account for 2.91 percent, Longzhong statistics showed.

4 Trend analysis of acrylic acid import and export in China

By the end of August 2022, China will import 24,100 tons of acrylic acid, up 11,500 tons from 2021. The average import of acrylic acid in 2022 was 0.3 million tons from January to August. Of these, February imports were the largest at 0.54 million tons, accounting for 22.38 percent of the total import volume in August through 2022. The main reason is the expected stock build-up around the Chinese New Year. Imports in May were the lowest at 101,000 tons, accounting for 4 percent of the total for the period up to August 2022. The main reasons are: RMB prices have risen during the import negotiations, and the spread between the dollar and the market has narrowed. After the first quarter of production, the total supply of domestic resources increased significantly, and the performance of domestic demand was less pronounced. In addition, fast-rising costs of acrylic acid and lower downstream production and marketing margins also weighed on acrylic import pressure during the month. Overall, with the expansion of domestic acrylic capacity, the volume of acrylic imports or the potential to maintain a stable sliding state.

In 2022, China's acrylic import sources are relatively concentrated. According to customs data, China's acrylic imports in the first eight months of 2022 were mainly from Japan, South Korea and Malaysia. The top three accounted for 98.5% of the total, with an average monthly import price of $1,384.30 per ton. From the point of view of the amount of imports, although Japan continues to hold the first place, the amount is decreasing from year to year. In 2022 January-August, the total import volume was 10,000 tons, accounting for 41.6 percent, while Malaysia not only reduced its import volume but also imported 0.4 tons in 2022 January-August.And while it is firmly in the top three imports, it is also falling in percentage terms, moving from second to third in the ranking. While South Korea has benefited from its geographical location and price advantage, while import figures continue to be below 10,000 tons, the proportion is expanding. Imports from South Korea in 2022 totaled 0.97 million tons from January to August, accounting for 40 percent of the total.

From January to August 2022, acrylic acid imports remained dominated by general trade, with a total of 15,000 tons, or 62 percent of the total. With the continuous expansion of domestic acrylic production capacity, in 2022 the general trade surpassed the import and export of raw material processing and bonded supervision sites to become a major importer of acrylic acid for the first time. And, while imports of acrylics were minor throughout the year, they increased to 15,000 tons in general trade from near 10,000 tons in 2021, a significant increase.

For the five-year period from 2018 to 2022, the number of acrylic imports showed a fluctuating trend, with the unit price of imports and the number of imports negatively correlated, with higher import prices leading to fewer imports and vice versa.

Malaysia imports the most, but the volume fluctuates from time to time and is volatile. Japan's imports have fluctuated around 20,000 tons, with the largest amount reaching 31,100 tons in 2019. China's import trade with Taiwan was the most stable, fluctuating slightly between 0.03 and 0.04 million tons.

The import trade pattern of acetic acid is mainly processing trade and general trade, and the volume of incoming materials for processing trade is minor, with the annual import volume within 100 tons. The amount of trade in raw materials for processing first increased and then decreased, while the amount of trade in general increased and then decreased.

Acrylic acid import registration is still mainly in Jiangsu and Guangdong regions, and the expansion of domestic capacity is expected to continue to reduce import volume, especially in Guangdong, or significantly reduce it.

In the second half of 2022, downward pressure on overseas economies increases, inflation in the eurozone continues to rise, and the overall stance of the US Federal Reserve is hawkish, making rate hikes to combat inflation a priority.The monetary policy dislocation between China and the United States, where China continues to implement a loose monetary policy, has led to the continuous depreciation of the Chinese currency.While the measure is beneficial for acrylic exports, the risk of foreign capital outflows has increased.Most organic chemicals, including acrylic, are under pressure during the year.The two sides focused on implementing domestic policies to stabilize growth, especially in the real estate sector.In terms of the monthly export of acrylic acid in 2022, in addition to the export volume of 30,000 tons in June and 14,900 tons in January, both of which are higher than the average 13,000 tons in January to August in 2022, the export volume of the rest of the time is lower than the monthly average. However, domestic acrylic exports are still growing slowly compared to the 2021 average monthly export level of 0.98 million tons.

In 2022, the total export of acrylic acid from January to August was 99,700 tons, with an average export of $1776.02 / ton. The main destinations continued to be Taiwan, India and South Korea, which together accounted for 71.7 percent of total exports. Of these, Taiwan exported approximately 40,000 tons, or 39.95% of the total; India exported 23,300 tons, 23.47% of the total; The third-ranked country, South Korea, exported 383 metric tons, or 8.36 percent.Thanks to the continuous expansion of acrylic acid capacity in China, the factory actively seeks the export market, the export destination of Taiwan region, its export volume is still increasing, the total export volume of 39,800 tons from January to August, has exceeded the annual export level of 36,500 tons to Taiwan in 2021, In addition, the export price also increased from the annual average of $1,355.54 per ton in 2021 to $1,576.17 per ton. It is worth noting the increased demand from Indonesia, which ranked fifth in 2021 with less than 5,000 tons of exports. However, in the January-August 2022 period, Indonesia's exports have reached 0.300 tons, also moving up to fourth place.

From January to August 2022, acrylic acid exports will continue until 2021, with its general trade exports dominating. According to customs statistics, the total export volume of general trade from January to August is 95,200 tons, which is close to the total export volume of 100,000 tons in 2021, and its average export price has increased from 1460.52 dollars per ton in 2021 to the current level of 1778.30 dollars per ton. In addition, import processing and bonded supervision still occupy the second and third places in terms of export volume, but their export volume has decreased significantly due to stable overseas demand for acrylic, especially in import processing. According to customs statistics, 11,300 tons of imported materials were processed in 2021, but by the end of January to August 2022, only 4,500 tons had been processed.

From 2018 to 2022, the export volume of acrylic acid increased fluctuatingly, except in 2020 due to a global public health event resulting in inferior acrylic acid export volume, the rest of the time it maintained a year-on-year increasing trend.From 2018 to 2022, the average annual export volume will be 99,100 tons, and the average export unit price will be 8,398.26 yuan per ton.For 2022 performance, both export volume and export unit price are significantly higher than this value.

Acetic acid is mainly exported to India and South Korea. During the five-year period from January to August 2018 to 2022, the amount of exports increased and decreased, showing an overall trend of rising in waves; trade with South Korea was little changed, fluctuating in the range of 10,000 tons.

The export trade of acetic acid is mainly based on the trade of material processing and general trade. Except for 2021, the volume of trade in materials processing is higher than that of general trade. Judging by the shift in volume, the general trade volume is increasing year by year.

From the export registration point of view, acrylic exports are mainly distributed in Jiangsu and Zhejiang provinces. The main export area is acrylic production concentrations. With continued investment and construction of domestic acrylic capacity, Shandong's export volume is expected to slowly increase in the later period, while South China's will gradually transform into a major export as Guangxi's investment and construction of new capacity or from major import registration.

As the supply of acrylic acid in China has grown, it has largely formed a substitute for imported resources and restrained the growth rate of imports. However, due to the characteristics of acrylic acid as a basic raw material, especially the rapid development of downstream esters, the growth of acrylic acid imports has also been slow, while the growth of the export market has been relatively pronounced and its main purpose is or was to alleviate the domestic supply contradiction.