Supply Excess, Acrylonitrile Market Weakens in China

December 5th News

This week, the news front was calm, and there was no significant improvement in the fundamentals. The industry capacity utilization rate remained at a level slightly above 80%, with oversupply and increasing inventory, leading to a downward fluctuation in the market. As of December 5th, the mainstream ex-tank self-pickup price at East China ports was 7,975 CNY/ton, down 150 CNY/ton from last week; the short-distance delivery price in the Shandong market was 7,900 CNY/ton, down 25 CNY/ton from last week.

Over supply:

During the current period, the facility shows no significant fluctuations. Supply remains saturated while demand has weakened somewhat in certain regions, leading to rising inventories at some enterprises. According to statistics, as of December 4, China’s acrylonitrile plants had a weekly capacity utilization rate of 80.6%, unchanged from the previous period. Weekly production stood at approximately 91,800 tons, also unchanged from the prior period. Total inventory levels were around 55,500 tons, up by 2,000 tons from the previous week, with inventory increases observed at some individual enterprises.

Weakening demand:

This week, the capacity utilization rates of major downstream industries in China varied. The ABS capacity utilization rate decreased to 68.3%, a decline of 2.9% from last week, with a capacity base of 11,090,000 tons per year. The capacity utilization rate for acrylic fiber enterprises remained at 76.53%, but Jilin Chemical Fiber's Hebei Jigao acrylic facility plans to shut down for maintenance for 8-10 days in mid-to-late December. The capacity utilization rate for acrylamide increased to 55.87%, a rise of 0.66% from last week. Overall, demand has weakened.

Rising costs:

During the week, the prices of upstream propylene and synthetic ammonia in China increased, leading to a continued rise in the raw material costs for acrylonitrile production, which resulted in continued losses for acrylonitrile production this week. According to statistics, as of December 4th, the market price of propylene in Shandong, China, was 6,050 CNY/ton, an increase of 25 CNY/ton from 6,025 CNY/ton at the end of last week. The average production cost of acrylonitrile was 8,557 CNY/ton, up by 0.60% week-on-week. Meanwhile, the average production profit of acrylonitrile was -512 CNY/ton, down by 131 CNY/ton week-on-week.

Looking ahead, the overall supply in China’s acrylonitrile market remains ample. Currently, there are no plans for capacity reductions or maintenance at major plants in the short term. Meanwhile, downstream users have ample inventories and show only moderate purchasing interest, leading to sluggish spot market transactions. In the near term, prices are still expected to decline further. However, cost pressures persist, continuing to limit the extent of any downward movement in the market.