Demand-Side Negative Factors Abound as Acrylic Market Stalls at Low Levels

October 29th, news

Market Overview:

The current core feature of the acrylic market is "sideways consolidation at low levels," driven by "moderate demand growth." Data shows that as of October 29, the benchmark price for acrylic was 6,833.33 CNY per ton, up 1.99% from the beginning of the month (6,700.00 CNY/ton). This price level remains in the mid-to-lower range for the year, indicating a lack of upward momentum and an overall subdued trading atmosphere.

Industry giant Wanhua Chemical has reduced its acrylic acid quotation in North China to 6,200 CNY/ton, with a cumulative reduction of 350 CNY/ton over the past two days. The proactive price reduction by the leading company not only directly lowered the market focus but also sent a clear bearish signal to the market, intensifying sales pressure on other producers and exacerbating the market's pessimistic sentiment.

Cost Side:

The key bearish factor in the market comes from the upstream. The price of propylene, a raw material, has declined. As of October 29, the benchmark price for propylene is 6150.75 CNY/ton, down 6% from the beginning of the month (6543.25 CNY/ton). As the primary cost component of acrylic acid, the weakening of propylene prices has led to a collapse in cost support for acrylic acid production, opening up room for price declines.

Demand Side:

Shift in Downstream Procurement Strategy: Amidst a market sentiment of "buying when prices rise, not when they fall," downstream users are adopting a bearish outlook on future price movements. As a result, they are predominantly employing a "rigid demand procurement" strategy—purchasing only the quantities necessary to sustain current production levels, rather than stockpiling large volumes. This approach is making it difficult for overall market transactions to gain significant momentum.

Poor Transmission of Terminal Demand: The primary downstream sectors of acrylic acid, such as butyl acrylate, may also experience weak terminal demand—driven by industries like coatings, textiles, and adhesives. A downturn in these end-consumer markets can ripple upward through the industry chain, ultimately leading to a contraction in demand for acrylic acid itself.

Supply pressure persists: Meanwhile, the facility utilization rate of major Chinese producers remains stable, with ample market supply. In the face of weak demand, stable supply has instead turned into inventory pressure, forcing companies to engage in price competition for limited orders.

Outlook for the Future

Overall, without significant positive stimuli, the acrylic acid market in China is likely to continue a weak and consolidating pattern in the short term.

Negative factors: The weakness in the cost of propylene is unlikely to reverse in the short term, and the soft demand from downstream sectors is expected to persist. These two points will continue to suppress market prices.

Potential Variables: It’s crucial to closely monitor whether large-scale production facilities unexpectedly shut down for maintenance, or if macroeconomic policies emerge that exceed expectations and stimulate downstream industries. These factors could temporarily alter the supply-and-demand dynamics, potentially triggering market volatility.

In summary, the current acrylic market is currently experiencing a typical cycle dominated by "weak demand," a trend further exacerbated by collapsing costs and bearish market sentiment. Ultimately, a market recovery will depend on a substantial improvement in downstream end-consumer demand.