Supply Increases in Stages, China’s Acrylonitrile Market Slips Narrowly

May 22nd, news:

This week, both supply and demand showed an increase, yet the underlying fundamentals remain weak. Downstream demand remains sluggish, and market trading activity has softened. However, cost factors continue to provide some support, and industry inventories remain manageable for now. Amid a phase of increasing supply, China’s acrylonitrile market experienced a narrow decline. As of May 22, the mainstream ex-tank self-collection price at East China ports was between 10,900 and 11,100 CNY per ton, up 100 CNY per ton from last week’s range of 10,800 to 11,000 CNY per ton. In the Shandong market, the short-distance delivered price was between 10,650 and 10,750 CNY per ton, up 100 CNY per ton from last week’s range of 10,550 to 10,650 CNY per ton.

Supply increases temporarily:

During the week, Jilin Petrochemical and Zhejiang Petrochemical both increased their acrylonitrile plant loads to around 90%, leading to an increase in the industry's capacity utilization rate and a temporary rise in supply. According to statistics, the weekly capacity utilization rate of acrylonitrile plants in China from May 15-21 was 72.11%, an increase of 7.27% compared to the previous period; the weekly production was about 84,100 tons, an increase of 8,400 tons from the previous period. Inventory levels fluctuated during the week, but overall remained manageable. As of May 21, the total inventory was approximately 46,500 tons, an increase of 500 tons from the previous week.

Slight increase in demand:

This week, the capacity utilization rate of major downstream industries in China as a whole has improved. Among them, the capacity utilization rate of ABS is 59%, an increase of 0.89% from last week; the capacity utilization rate of acrylic fiber enterprises is 37.70%, an increase of 15.24% from last week. Jilin Chemical Fiber's Huarong Spinning 150,000 tons of acrylic fiber facility and Jimei's 155,000 tons of acrylic fiber facility have both restarted; the capacity utilization rate of acrylamide is 56.96%, a decrease of 0.12% from last week. Overall, the demand for acrylonitrile has slightly increased.

Cost pressure remains:

During the week, prices of propylene and synthetic ammonia continued to decline, while acrylonitrile prices fell slightly within a narrow range. Although the loss-making situation in acrylonitrile production has improved, cost pressures remain amid ongoing geopolitical turmoil in the Middle East. According to statistics, as of May 21, the spot price of propylene in Shandong stood at 9,700 CNY per ton, up 215 CNY per ton from last week’s 9,485 CNY per ton. The average production cost of acrylonitrile was 11,507 CNY per ton, down 2.17% month-on-month. Meanwhile, the average production profit for acrylonitrile during the same period was -686 CNY per ton, up 76 CNY per ton month-on-month.

Later forecasts suggest that the current spot market in China is experiencing low buying interest. However, due to expectations of high contract settlement prices, the room for market operations is limited. Additionally, as the capacity utilization rate in the industry further increases, supply continues to grow, while the potential for demand growth may still be limited. Intermediaries lack operational space, and under cost pressure, suppliers are cautious about adjusting prices. In the short term, the fundamentals of the acrylonitrile industry in China remain weak, and prices are expected to continue to decline slightly. However, the downward space for the market will still be limited.