Cost-Driven Acrylonitrile Market Bottoming Out and Consolidating

February 27 news

During the week, there was limited fluctuation in the facilities. During the Spring Festival, inventory digestion was slow, and the inventory of some enterprises increased, leading to an increase in supply. However, the price trend of propylene, the raw material, was relatively strong, increasing the cost pressure for acrylonitrile production, and the market was at the bottom consolidation. As of February 27th, the mainstream ex-tank self-pickup price at East China ports was 7,450 CNY/ton, an increase of 100 CNY/ton from before the holiday; the short-distance delivery price in the Shandong market was 7,100 CNY/ton, also an increase of 100 CNY/ton from before the holiday.

Supply remains ample:

During the week, there was limited fluctuation in the facilities. The 520,000 tons/year acrylonitrile plant of Zhejiang Petrochemical increased its operating rate to around 80%, leading to an increase in supply. According to statistics, as of February 26, the weekly capacity utilization rate of acrylonitrile plants in China reached 75.61%, an increase of 0.47% from the previous period; the weekly output was approximately 88,200 tons, an increase of 500 tons from the previous period. During the week, the supply increased, while the inventory digestion was slow during the Spring Festival, leading to an increase in inventory for some companies. As of February 26, the total inventory was about 53,000 tons, an increase of 10,000 tons compared to before the festival.

Demand is increasing slowly:

This week, the capacity utilization rate of the main downstream industries of acrylonitrile in China has generally increased. The load of Jilin Petrochemical Jieyang and other facilities has been raised, and the ABS capacity utilization rate has increased to 70.70%, up by 0.2% from last week; Ningbo Zhongxin has restarted, and the capacity utilization rate of the acrylic fiber industry has reached 80.74%, an increase of 1.83% from last week; after the holiday, factories have gradually resumed work, and the capacity utilization rate of acrylamide has increased to 46.63%, up by 11.19% from last week, with overall demand slowly increasing.

Raw material trends are relatively strong:

The price trend of propylene, the raw material, has been relatively strong, and cost pressures on acrylonitrile production remain unabated. During the week, acrylonitrile prices remained at low levels, while the price of propylene, the raw material, continued to rise, further exacerbating the loss-making situation for producers. According to statistics, as of February 26, the spot price of propylene in Shandong stood at 6,525 CNY per ton, up 80 CNY per ton from the pre-holiday level of 6,445 CNY per ton. The average production cost of acrylonitrile was 8,658 CNY per ton, up 0.65% month-on-month. Meanwhile, the average profit margin for acrylonitrile production during the same period was -1,267 CNY per ton, down 105 CNY per ton month-on-month.

Later forecasts suggest that the recent Chinese acrylonitrile market will see minor adjustments, with major suppliers making varied price adjustments, but the price difference between the north and south is gradually narrowing. Under the pressure of losses, manufacturers have the intention to maintain prices, but the fundamentals are weak. The overall supply is loose while demand still needs to fully recover. The market lacks further momentum for price increases, and in the short term, minor adjustments will be the main trend.