Weak Supply and Demand, Falling Costs: Acrylic Acid Prices Hit New Lows and Stabilize

May 27 news

I. Weekly Market Overview

This week, the Chinese acrylic acid market continued to operate in a weak pattern, with the price center continuously declining. According to data, the benchmark price of acrylic acid on May 21st was 8,650.00 CNY/ton, a cumulative decrease of 14.78% from the beginning of the month (10,150.00 CNY/ton), with no significant signs of rebound. The industry as a whole presents a "consolidation after decline, light trading" situation.

II. Interpretation of Xianhuotong Technical Signals: The mean difference remains negative and continues to widen, indicating a dominant bearish trend.

1. Mean Difference Indicator: Negative Contraction—Divergence of Downward Momentum

Since the average difference has been in the negative range since mid-May, the 10-day moving average this week is still below the 20-day moving average, with a negative average difference. However, unlike the previous two weeks where the "widening of the negative difference" corresponded to an accelerated decline, this week the average difference shows a "narrowing of the negative difference," meaning that the negative difference between the 10-day and 20-day moving averages is narrowing. This signal indicates that the market's downward trend is entering a deceleration phase, with bearish momentum weakening, and the trend is shifting from a trending decline to a consolidation at low levels. In terms of the moving average pattern, the 10-day, 20-day, and 30-day moving averages are still in a bearish arrangement, and the short-term moving average has not yet shown a turning point signal to move upwards.

2. Price at the 5th percentile: At a low point for the entire cycle, with continued downward pressure.

From the auxiliary indicator "price 5-level position," this week, the acrylic acid price is in an absolutely low range in the 10-day, 20-day, 30-day, and 60-day dimensions, and only in the 90-day and one-year dimensions is it at a moderately low level. Looking at the price statistics for the year, the current price still has a significant gap from the annual low of 5850 CNY/ton. The upward pressure gap has not yet closed, and short-term support from below has not fully emerged. The price is in a vulnerable position where it is "easier to fall than to rise."

Three-dimensional Breakdown of Fundamentals: Triple Resonance of Cost, Supply, and Demand

1. Cost side: The raw material propylene has weakened, further loosening the support.

This week, the upstream propylene market in China has continued to be weak. As of May 27, the benchmark price of propylene was 9067.67 CNY/ton, a decrease of 4.49% compared to the beginning of the month (9494.33 CNY/ton). The cost support for acrylic acid from propylene prices has continued to weaken. The production profit of acrylic acid has narrowed to a loss, with only a small amount of cost support remaining, but there is a lack of further upward momentum.

2. Supply side: Limited plant maintenance, industry operating rates under pressure

On the supply side, CNOOC and Lanzhou Petrochemical's acrylic acid units have temporarily shut down, leading to a slight reduction in industry operations. However, the supply of spot goods remains relatively sufficient, with no significant decrease in factory inventory. Cargo holders continue to follow market trends and offer discounts to sell their stock.

It is worth noting that although the operating rates of some enterprises have declined somewhat, the overall oversupply situation on the supply side has yet to undergo a fundamental shift. Since the beginning of the year, industry operating rates have remained at relatively high levels. At present, the load factor of 70% to 75% still ranks among the upper-middle levels for the same period in history, and thus the pressure to clear inventory on the supply side has not eased in the short term.

3. Demand Side: Downstream operations are fully reducing loads, with sporadic orders driven by essential needs.

Demand is the core driving factor in the current acrylic acid market. The operating rates of various downstream industries of acrylic acid in China are generally declining, with insufficient terminal orders and low purchasing willingness.

Butyl acrylate: As the main downstream consumption product of acrylic acid, its operating rate has further declined from 58.07% in the previous period to 54.97%, a decrease of 3.1 percentage points, reflecting weak demand in the terminal industries such as adhesives and coatings in China.

SAPresins: The operating rate remained at 52.38%, unchanged from the previous period, indicating that demand in application areas such as hygiene products remains reasonably strong but has not yet generated additional growth momentum.

Overall, the demand side is exhibiting a cycle characterized by "downstream demand reduction → sporadic essential demand → no concentrated restocking → deepening wait-and-see attitude," with no signs of reversal or acceleration yet.

IV. Outlook: Bottom Signals Remain Unconfirmed—Next Week’s Trend Forecast

Based on the current technical signals, fundamentals, and macro variables, our assessment of the acrylic acid market in China for next week is as follows:

Technical analysis: The current mean difference is in a phase of negative contraction, indicating that the downward momentum has weakened somewhat, but the bearish alignment remains unbroken, and the moving averages have not shown any signs of turning. The signals for a reversal are still insufficient. If the mean difference narrows further or even turns positive, then the market trend will need to be re-evaluated.

On the cost side: In the short term, raw material propylene continues to face dual pressures from increased supply and weak downstream demand. We expect the market to remain in a relatively weak and volatile pattern, making it difficult for propylene acid to receive stronger cost support. Consequently, upstream suppliers are unable to provide upward momentum for prices.

Fundamental core: Whether the demand side can initiate a concentrated restocking remains the decisive variable. Currently, the operating rate of butyl acrylate is still hovering around a low of 54%. If there is a marginal improvement in downstream terminal orders, or if a concentrated purchasing window is released, the market may gradually stabilize; conversely, if the demand side continues to be weak, there is still a risk of further decline in price levels.

Key areas of focus: Changes in the operating rate of the acrylic acid industry, particularly developments in plant maintenance; operating conditions of key downstream products such as butyl acrylate; and trends in the price of propylene, the raw material used in acrylic acid production.

On balance, the acrylic acid market is likely to continue its low-level, volatile consolidation pattern next week, with both upward and downward room for movement remaining relatively limited. The likelihood of a short-term reversal to an upward trend is low. For medium- to long-term stabilization and recovery, we’ll need to see two signals simultaneously: first, the average price differential must stop declining and turn positive; second, downstream demand must begin to pick up in earnest. As a key support level, we can initially pay close attention to the emotional dynamics around the 8,500 CNY/ton mark.