Cost-driven Significant Increase in Acrylonitrile Prices in China

March 6th, news:

This week, there are still no signs of easing in geopolitical risks, and international oil prices have risen. The price of propylene, a raw material, has continuously jumped, significantly increasing the cost pressure for acrylonitrile production, with prices following the rise in raw materials. As of March 6, the main ex-tank self-pickup price at East China ports is 8,650 CNY/ton, an increase of 1,050 CNY/ton from 7,500 CNY/ton last week; the short-distance delivery price in the Shandong market is 8,400 CNY/ton, an increase of 1,200 CNY/ton from 7,200 CNY/ton last week.

Local inventory decline:

During the week, Fushun Petrochemical's 130,000 tons/year plant was shut down for maintenance, and the capacity utilization rate was slightly reduced, but it still remained around 75%. According to statistics, as of March 5th, the weekly capacity utilization rate of acrylonitrile plants in China was 74.88%, a decrease of 0.73% from the previous period; the weekly production was about 87,400 tons, a decrease of 8,000 tons from the previous period. The supply volume decreased slightly during the week, while demand recovered somewhat after the holiday, and the price increase stimulated buying, leading to a local reduction in inventory. As of March 5th, the total inventory was approximately 50,000 tons, a decrease of 3,000 tons from the previous week.

Demand has somewhat recovered:

This week, the capacity utilization rate of the main downstream industries of acrylonitrile in China has generally increased. The capacity utilization rate of ABS is 69.50%, a decrease of 1.2% compared to last week; after the holiday, factories have gradually resumed work, and the capacity utilization rate of acrylic fiber enterprises is 85.31%, an increase of 4.57% compared to last week; the capacity utilization rate of acrylamide is 55.29%, an increase of 8.66% compared to last week. Overall demand has increased.

Cost pressure has increased significantly:

During the week, the price trend of propylene, the raw material, was relatively strong. Although acrylonitrile prices followed the rise in raw material costs, the situation of production losses remained unchanged. Although acrylonitrile prices stayed at low levels during the week, the price of its raw material, propylene, continued to climb, further exacerbating the loss-making situation for producers. According to statistics, as of March 5, the spot price of propylene in Shandong stood at 7,370 CNY per ton, up 960 CNY per ton from last week’s 6,410 CNY per ton. The average production cost of acrylonitrile reached 8,947 CNY per ton, an increase of 3.34% month-on-month. Meanwhile, the average production profit for acrylonitrile during the same period was -1,238 CNY per ton, up 29 CNY per ton month-on-month.

Looking ahead, the current market price of acrylonitrile is experiencing an expanding price increase, and cost-driven factors are steadily gaining momentum. Moreover, industry players are concerned about the ongoing supply situation of raw materials. Amid expectations of continued losses and supply uncertainties, major suppliers have significantly raised their quoted prices. Additionally, there are expectations of a localized reduction in supply in the later period, further fueling a bullish market sentiment. However, in the short term, overall market supply remains relatively ample, so it’s important to monitor how downstream product profits are being squeezed and how this affects the willingness of buyers to accept raw materials.