July 10th News
This week, with continuously weak demand and ample overall supply, the market price of acrylonitrile in China has significantly decreased. Suppliers have taken active price reduction measures, which have further accelerated the decline. As of July 10, the ex-tank price in the East China market has dropped from 10,050 CNY/ton last week to around 9,350 CNY/ton, a decrease of 7%; the price in the Shandong market has fallen by 700 CNY/ton to 9,200 CNY/ton delivered.
Fundamental analysis:
Currently, China's acrylonitrile industry capacity utilization rate remains above 70%. Despite the overall demand being in a low season, supply is relatively abundant. At the same time, the operating rate of the acrylic fiber industry has also begun to decline again in July, leading to a further reduction in overall consumption. Since the beginning of the month, downstream users have maintained a just-in-time purchasing rhythm, and the spot buying interest is particularly weak, resulting in sluggish sales in some areas. Additionally, since the second half of June, the production profit of acrylonitrile has been quite substantial, with the theoretical profit per ton exceeding 1,000 yuan at its highest. This has stimulated the timely resumption of operations at plants such as Korol and Sinochem Quanzhou, as well as the delayed maintenance of the Liaoning Kingfa plant.
Low costs combined with low demand have gradually increased the bearish sentiment in the acrylonitrile market, and buyers have remained in a wait-and-see mode, prompting suppliers to take active price reduction measures. The rapid decline in acrylonitrile prices has also caused buyers to hold back, further accelerating the downward trend of the market.
However, at the beginning of this round of market decline, the acrylonitrile industry in China maintained a low inventory level. Therefore, even though there has been some inventory accumulation recently, the overall inventory remains manageable. Moreover, the recent price of propylene, the raw material, has been relatively strong, and the cost pressure has become prominent again. The price of acrylonitrile has already fallen to around the marginal cost line, and suppliers' willingness to further reduce prices will decrease. Additionally, comparing the current spot price with the expected contract settlement price, the advantage of the spot price has become evident, attracting some buyers to gradually follow up and replenish their stocks. As a result, the trading atmosphere in the spot market has significantly improved over the past two days.
Market Forecast: The direction of propylene price fluctuations will continue to provide support for acrylonitrile prices, yet the fundamental outlook remains far from optimistic. The overall demand slump is expected to persist until around mid-August, and new production capacity is set to come online again in the later period—specifically, Zhejiang Petrochemical’s 660,000-ton facility and Sino-British Petrochemical’s 130,000-ton facility. Consequently, oversupply will continue to weigh on the acrylonitrile market. In the future, apart from external news and supply uncertainties that may trigger price movements, acrylonitrile prices are likely to remain oscillating near the cost line for an extended period.
