Supply Reduction, Acrylonitrile Market Hits Bottom and Consolidates

January 23 news

This week, the overall load of factories in East China decreased. A set of devices at Silbang was shut down, and the Jihua Jieyang facility was temporarily stopped for maintenance. The supply side began to reduce output, while downstream users started to stock up moderately, leading to a decrease in company inventories. The acrylonitrile market has bottomed out and is being reorganized. As of January 23, the mainstream ex-tank self-pickup price at East China ports was 7,250 CNY/ton, an increase of 50 CNY/ton from last week; the short-distance delivery price in the Shandong market was 7,050 CNY/ton, a decrease of 50 CNY/ton from last week.

Supply reduction:

During the week, overall load reduction occurred in factories in East China. Shenghong's 260,000 tons/year acrylonitrile unit was shut down, reducing the number of operating units to two, with the operating load dropping to 50%. Jilin Petrochemical (Jieyang)'s 130,000 tons acrylonitrile unit has been under maintenance since January 20th, with an expected duration of around 19 days. Shandong Haijiang's 130,000 tons acrylonitrile unit is still under maintenance, leading to a decrease in overall supply. According to statistics, as of January 22nd, the weekly capacity utilization rate of acrylonitrile plants in China was 75.22%, a decrease of 2.93% from the previous period; the weekly production was about 85,700 tons, a decrease of 3,400 tons from the previous period. The total inventory was approximately 57,300 tons, a decrease of 4,200 tons from last week, indicating a reduction in corporate inventory.

Increased demand:

This week, the overall production of major downstream industries in China has decreased. Zhejiang Petrochemical reduced its load, with the capacity utilization rate for ABS dropping to 66.8%, a decrease of 3% from last week. The capacity utilization rate for acrylic fiber enterprises remained at 65.97%, the same as last week. The capacity utilization rate for acrylamide was 56.29%, a decrease of 0.36% from last week. However, lower prices attracted some buyers, and downstream users began to stock up moderately, leading to an increase in overall demand.

Rising costs:

During the week, the price of propylene upstream continued to rise, increasing the raw material costs for acrylonitrile production, while the price of acrylonitrile remained low and fluctuated. As a result, the production loss situation further worsened this week. According to statistics, as of January 22, the market price of propylene in Shandong was 6,175 CNY/ton, an increase of 30 CNY/ton from 6,145 CNY/ton at the end of last week. The average production cost of acrylonitrile was 8,430 CNY/ton, up 0.06% week-over-week, and the average production profit of acrylonitrile was -1,220 CNY/ton, down 45 CNY/ton week-over-week.

Later forecasts suggest that with current local plant fluctuations and active load reductions, the industry capacity utilization rate has dropped to around 70%, which may somewhat alleviate the overproduction pressure. Additionally, low prices have attracted some buyers, leading to expectations of a rise in the Chinese acrylonitrile market. However, considering the seasonal decrease in demand before and after the Spring Festival, the room for market rebound will still be constrained.