Cost-driven: Acrylonitrile prices rise slightly

May 8 news

This week, overseas supply shortages continued, with high prices for acrylonitrile in the foreign market. Exports still had support, but consumption in China continued to decrease, with insufficient spot buying interest and poor trading. The price of propylene, the raw material, was strong, and under the impetus of cost, the price of acrylonitrile increased slightly. As of May 8th, the mainstream ex-tank self-pickup price at East China ports was 10,900-11,100 CNY/ton, an increase of 100 CNY/ton from last week's 10,800-11,000 CNY/ton; the short-haul delivery price in the Shandong market was 10,650-10,750 CNY/ton, an increase of 100 CNY/ton from last week's 10,550-10,650 CNY/ton.

Increased supply:

During the week, CNOOC Fudao (Hainan)'s 200,000 tons/year acrylonitrile plant has resumed production on one line. The industry's capacity utilization rate has increased, leading to an increase in supply. According to statistics, as of May 7, the weekly capacity utilization rate of acrylonitrile plants in China was 65.12%, an increase of 1.11% from the previous period; the weekly output was about 76,000 tons, an increase of 1,300 tons from the previous period. The supply remained low during the week, with mixed changes in inventory, but overall it was still manageable. According to statistics, as of May 6, the total inventory was around 48,000 tons, unchanged from last week.

Declining domestic demand:

This week, downstream users resisted high raw material prices, leading to an overall decrease in the capacity utilization rate of major industries in China. The capacity utilization rate for ABS was 57.45%, a decrease of 2.75% from last week; the capacity utilization rate for acrylic fiber enterprises was 24.95%, a decrease of 10.88% from last week; and the capacity utilization rate for acrylamide was 57.21%, a decrease of 0.23% from last week. Overall, the demand for acrylonitrile has decreased, and consumption continues to decline.

Rising costs:

During the week, the price of propylene, a raw material, increased significantly, leading to higher costs. The price of acrylonitrile saw a slight increase, but theoretical profits narrowed, and the production loss situation worsened. According to statistics, as of May 8th, the market price of propylene in Shandong, China was 9,700 CNY/ton, an increase of 215 CNY/ton from the previous week's 9,485 CNY/ton. The average production cost of acrylonitrile was 12,325 CNY/ton, up 3.79% week-over-week, while the average production profit of acrylonitrile was -1,325 CNY/ton, down 370 CNY/ton week-over-week.

Later forecasts indicate that the current acrylonitrile market in China is in a stalemate, with the external situation still unstable. Domestic demand remains weak, and there is insufficient buying interest for spot goods. Additionally, the 260,000-ton acrylonitrile unit of Kingfa Science & Technology in Liaoning plans to shut down for maintenance from early June for 15-20 days, and one line of the 520,000-ton acrylonitrile unit of Shanghai Secco shut down for maintenance on May 7. As a result, the overall operating rate has dropped from 50% to 25%. In the short term, the market is expected to remain stable as both supply and demand are reduced.