Cost-Driven Restart, Supply-Demand Resonance Drives Acrylic Prices Higher

February 25 news

This week, the acrylic acid market broke out of its previous consolidation pattern and saw a substantial price increase. Unlike the "profit recovery-driven resumption of production" in early to mid-February, the core driving force behind this round of increases has shifted to the restart of rising costs and tight supply, effectively supported by downstream rigid demand procurement. The market logic has shifted from "profit-driven" back to "cost-push + supply support." As of February 25, the benchmark price for acrylic acid in China was 6,283.33 CNY/ton, an increase of 2.01% compared to the beginning of the month (6,116.67 CNY/ton).

I. Cost Side:

This week, a key change occurred on the cost side: the price of propylene, a raw material, ended its previous stable trend and started to rise again. On February 25, the benchmark price of propylene was 6,521.00 CNY/ton, an increase of 1.82% compared to the beginning of the month (6,404.33 CNY/ton) in China.

The renewed upward pressure on costs has directly squeezed the profit margins for acrylic acid production, prompting manufacturers to raise their quoted prices in order to pass on cost pressures. Manufacturers responded swiftly. On February 24, Shanghai Huayi New Materials raised its ex-factory price for acrylic acid delivered to East China by 100 CNY/ton to 6,100 CNY/ton; on February 25, the company further increased the price by another 100 CNY/ton to 6,200 CNY/ton. Over the two-day period, the cumulative price increase reached 200 CNY/ton, representing a rise of 3.33%. Notably, the price increase was even more pronounced in the South China market: Satellite Chemical raised its ex-factory price for acrylic acid in South China directly from 6,300 CNY/ton to 6,700 CNY/ton, an increase of 400 CNY/ton in a single day, reflecting a growing tightness in regional supply.

Supply Side:

The supply side exhibits the characteristics of “high existing capacity and steady absorption of new capacity.” As of February 24, the average capacity utilization rate in China’s acrylic acid industry remained at a high level of 85.94%, continuing to rise slightly from the previous week. This level of operational activity indicates that producers are highly motivated to resume production and are well-equipped to fulfill current orders.

In terms of incremental capacity, BASF’s 400,000-ton-per-year butyl acrylate plant at the Zhanjiang integrated site has completed full commissioning in February. From a market perspective, the introduction of this new capacity has not put downward pressure on prices; rather, it has been effectively absorbed by downstream demand, underscoring the resilience of demand.

Notably, this week’s price increase has been accompanied by a transaction pattern characterized primarily by “negotiations based on actual deals,” indicating that sellers have maintained flexible room for price negotiation throughout the price hike, and the market has yet to show any signs of excessive enthusiasm.

III. Demand Side:

The demand side shows a healthy transmission pattern of "upstream price increases, followed by downstream price increases."

On one hand, rigid demand procurement continues to exist. Although downstream users are still adopting a wait-and-see attitude, the "moderately good" trading situation indicates that the rigid demand has not shrunk due to the price increase. On February 24, the price of acrylic acid in East China was 5850 CNY/ton, an increase of 50 CNY/ton, showing the market's capacity to absorb.

On the other hand, downstream derivatives have increased in tandem, providing support for the price hikes upstream. On February 24, Shanghai Huayi New Materials raised the delivered price of ethyl acrylate in East China by 100 CNY/ton to 9,500 CNY/ton. The simultaneous increase in both volume and price of downstream derivatives indicates a smooth cost transmission chain, enhancing the purchasing willingness of producers and creating a positive feedback loop for upstream acrylic acid.

In summary, this week’s rise in acrylic acid prices is the result of a confluence of factors: rising costs, high supply levels, and robust demand. The core transmission pathway is as follows: the rebound in propylene prices—the primary raw material—has squeezed profit margins, prompting producers to raise their quoted prices; on the supply side, operating rates remain high, and new capacity is being smoothly absorbed; downstream derivatives have followed suit, creating a positive ripple effect throughout the industrial chain. Unlike the earlier phase, when “profit recovery drove production resumption,” this round of price increase has shifted to a logic driven by “cost pressures plus supply support.” Future market trends will depend on whether propylene prices can sustain their upward trajectory and whether downstream sectors have sufficient capacity to absorb these higher prices.