Supply Increase Leads to a Rebound and Subsequent Decline in the Acrylonitrile Market in China

February 6th, News

This week, Yulong Petrochemical's new facility began commissioning, increasing the supply in the northern market. With the approaching Chinese New Year, the demand for spot purchases has weakened, leading to a decline in the acrylonitrile market after a previous increase. As of February 6, the mainstream ex-tank price at East China ports was 7,600 CNY/ton, down 100 CNY/ton from last week. In the Shandong market, the short-distance delivery price was 7,300 CNY/ton, down 400 CNY/ton from last week.

Increased supply:

Within the week, Shandong Yulong Petrochemical's second line 130,000 tons/year acrylonitrile new facility was successfully commissioned, increasing the supply in the northern market. The total acrylonitrile production capacity has been adjusted to 5,579,000 tons/year, with an increase in weekly output and a slight decrease in operation. According to statistics, as of February 5th, the weekly capacity utilization rate of acrylonitrile plants in China reached 68.92%, a decrease of 0.1% from the previous cycle; the weekly output was about 80,400 tons, an increase of 1,800 tons from the previous cycle. Before the holiday, suppliers actively reduced prices to clear inventory, while the supply in the East China region was limited. At the same time, downstream users still had some stockpiling, leading to a continued decline in corporate inventory. As of February 5th, the total inventory was around 46,000 tons, a decrease of 4,000 tons from the previous week.

Increased demand:

This week, the capacity utilization rates of the main downstream industries of acrylonitrile in China varied. The capacity utilization rate of ABS was 64.4%, a decrease of 1.7% from last week. The 400,000 tons/year ABS unit of Dagang Petrochemical in Tianjin was affected by the weather and reduced its operation to 60% on February 2, which lasted for 2-3 days. The capacity utilization rate of acrylic fiber enterprises was 82.75%, an increase of 16.75% from last week, as Jilin Petrochemical's acrylic fiber unit restarted. The capacity utilization rate of acrylamide was 52.39%, a decrease of 5.79% from last week, due to factory shutdowns and holidays in Henan and other areas. Overall, the demand for acrylonitrile increased.

Rising costs:

During the week, the price of propylene, an upstream product, continued to rise, increasing the raw material costs for acrylonitrile production. However, as the price of acrylonitrile remained relatively high, the production loss situation improved this week. According to statistics, as of February 5th, the market price of propylene in Shandong, China, was 6,440 CNY/ton, up 40 CNY/ton from 6,400 CNY/ton at the end of last week. The average production cost of acrylonitrile was 8,600 CNY/ton, a week-on-week increase of 0.34%. Meanwhile, the average production profit of acrylonitrile was -820 CNY/ton, a week-on-week increase of 271 CNY/ton.

Looking ahead, although supply in the East China region remains limited, with the commissioning of Yulong Petrochemical’s new facilities and the planned restart of Jihua (Jieyang)’s 130,000-ton acrylonitrile plant on February 10, market supply is set to increase. Moreover, as the Spring Festival draws nearer, buying interest in the spot market will gradually weaken. Therefore, the short-term market is expected to see mostly narrow-range declines.