Upstream and Downstream Continue to Play a Game; Acrylic Market Remains Stable

December 10th, News

I. Market Dynamics

This week, the Chinese acrylic acid market, under the ongoing tug-of-war between a slight increase in supply and cautious purchasing by downstream sectors, exhibited a "weakly stable, narrow fluctuation" operational characteristic. As of December 10, the benchmark price for acrylic acid was 6,066.67 CNY/ton, a decrease of 0.27% from the beginning of the month (6,083.33 CNY/ton).

The current "weak stability" situation is the result of a temporary balance among multiple forces including supply, demand, and costs in China.

1. Supply side:

According to market information, the supply of acrylic acid in the market has indeed increased. However, it is worth noting that the current market operating rate may not be at a high level. For example, Wanhua Chemical's 300,000 tons/year facility was still "operating normally" when it announced a price reduction on December 9, indicating stable supply but not excessive expansion. Holders generally adopt a flexible pricing strategy, and their willingness to lower prices in the bottom price range is not strong, providing some support to the market.

2. Demand Side:

Downstream demand is the core constraint in the current market. Orders in end-use sectors (such as coatings, adhesives, and SAP resins) are mediocre, leading downstream factories and traders to generally adopt a cautious and wait-and-see attitude toward the future. Purchasing activities are strictly based on rigid demand and small orders, lacking the enthusiasm for bulk inventory preparation, and there is a widespread mentality of price bargaining. This "buy as needed and absorb at low prices" model lacks the impetus for price increases, resulting in a stalemate in the market.

3. Cost End:

The price of propylene, the primary raw material, remained relatively stable in early December. As of December 10, the benchmark price for propylene was 6,220.75 CNY per ton, up 0.65% from the beginning of the month (6,180.75 CNY per ton). High costs have strengthened producers' willingness to hold prices; however, amid weak demand, it has become difficult for cost support to be smoothly passed down the supply chain, continuously squeezing profit margins.

II. Short-term Outlook:

Overall, the acrylic acid market in China does not have the conditions to break the stalemate in the short term. The market is expected to continue to consolidate within the current low range. Price fluctuations are limited, and there is a lack of clear directional guidance. The core contradiction in the market remains the tug-of-war between "high costs and weak demand."

III. Long-term Trends:

It is worth noting that, in the long term, the acrylic industry is undergoing structural transformation. The commissioning of a large amount of new production capacity will lead to a loosening of supply, and the core of industry competition is shifting from “scale-based competition” to “technology-driven premium pricing.” Leading companies that possess the capability to produce high-end specialty products—such as high-purity electronic-grade and medical-grade acrylic—and enjoy integrated industrial-chain cost advantages will gain stronger competitiveness.