Weakening Demand Causes Acrylonitrile Market to Continue Declining

February 13th, news:

This week, the devices that were shut down for maintenance in the early part of the week restarted and resumed operation, increasing market supply. With the approach of the Spring Festival, the demand for spot goods has weakened, leading to a continued decline in the acrylonitrile market. As of February 13th, the mainstream ex-tank self-pickup price at East China ports was 7,350 CNY/ton, a decrease of 250 CNY/ton from last week; the short-distance delivery price in the Shandong market was 7,000 CNY/ton, a decrease of 300 CNY/ton from last week.

Increased supply:

In the early part of the week, the Shandong Haijiang and Jihua Jieyang plants, which were shut down for maintenance, have both restarted and resumed operations, leading to a continued increase in market supply. According to statistics, as of February 12, the weekly capacity utilization rate of acrylonitrile plants in China reached 72.27%, an increase of 3.35% from the previous period; the weekly output was about 84,300 tons, an increase of 3,900 tons from the previous period. Before the holiday, suppliers actively reduced prices to clear inventory, while supply in the East China region was limited. At the same time, downstream users still had some stockpiling, and corporate inventories continued to decline. As of February 12, the total inventory was around 43,000 tons, a decrease of 3,000 tons from the previous week.

Weakening demand:

This week, the capacity utilization rates of the main downstream industries of acrylonitrile in China showed mixed trends. The capacity utilization rate of ABS was 68.9%, up by 4.5% from last week, as plants such as Zhejiang Petrochemical increased their load, but the overall industry operating rate remained low. Another major downstream industry, acrylic fiber, is currently mainly executing long-term contracts, with significant pressure on market demand, providing limited support for acrylonitrile procurement. According to statistics, the capacity utilization rate was 78.91%, down by 3.84% from last week, with Ningbo Zhongxin shutting down. The capacity utilization rate of acrylamide was 35.44%, down by 16.95% from last week, as multiple factories stopped operations for the holiday, leading to a decrease in overall demand for acrylonitrile.

High costs:

During the week, the upstream propylene prices in China remained stable, while acrylonitrile prices fell, leading to a further increase in production losses. According to statistics, as of February 12th, the market price of propylene in Shandong was 6,445 CNY/ton, an increase of 5 CNY/ton from 6,440 CNY/ton at the end of last week. The average production cost of acrylonitrile was 8,602 CNY/ton, up 0.02% week-over-week, while the average production profit of acrylonitrile was -1,162 CNY/ton, down 342 CNY/ton week-over-week.

Later forecasts suggest that recent low prices have attracted some buyers, leading to a decrease in manufacturers' inventory. At the same time, cost pressure continues to exist, and suppliers still have the intention to maintain prices. It is expected that the market may gradually bottom out and stabilize before the Chinese New Year. After the Chinese New Year, it is anticipated that overall supply will remain stable, while demand will gradually recover and grow. Although there may be some inventory accumulation during the Chinese New Year, after the pre-holiday inventory clearance, major manufacturers are not expected to face significant inventory pressure. At that time, cost pressure will once again become the main driving force for suppliers to maintain prices. It is expected that the acrylonitrile market price will show a low-range fluctuation in the short term after the holiday, but in the long term, it is expected to rise as demand recovers.