July 15th, according to news,
I. Market Overview
This week, the Chinese acrylic acid market showed a "first suppression then rise" trend. Although prices were hovering at low levels at the beginning of the week, with strong support from a significant increase in the price of the upstream raw material propylene, the spot price of acrylic acid saw a noticeable rebound in the latter half of the week. As of July 14, the benchmark price of acrylic acid was reported at 7,516.67 CNY/ton, an increase of about 5.62% from 7,116.67 CNY/ton at the beginning of the week (July 8), indicating a strong intention to recover.
2. Fundamental Logic
Cost Side: Propylene prices have surged significantly, and the rigid rise in costs has pushed factories to maintain their price floor.
1. This month, the benchmark price of propylene in China increased from 7,411 CNY/ton at the beginning of the month to 8,417.67 CNY/ton, a cumulative increase of 13.58%, which is much higher than the 5.62% rebound in acrylic acid prices this week. Propylene is the only core raw material for acrylic acid, and the continuous rise in raw material prices directly compresses the profit margins of acrylic acid producers, leading to widespread losses for manufacturers during the earlier period of low prices.
2. Under continuous losses, companies' willingness to sell at low prices has vanished, and they have taken the initiative to control volumes and reduce the external sales of low-priced goods, leading to a tightening of available spot market supplies. Coupled with the expectation of rising costs due to continuously increasing raw material prices, factories have been continuously raising their ex-factory quotes, which has become the most critical driver for the current rebound in acrylic acid prices.
3. In the early stage, the price of acrylic acid in China decreased significantly and remained low for a long time, completely failing to keep up with the rising trend of propylene. This round of price increase is a delayed catch-up and recovery, and the extent of the recovery will be determined by the duration of the propylene price increase.
Demand Side: Rigid demand is moderately recovering, with no explosive positive factors, and there is a ceiling for upward movement.
1. Downstream industries such as coatings, highly absorbent resins, and acrylates have been adopting a wait-and-see approach in the earlier stages, waiting for prices to bottom out. This week, after acrylate prices rebounded from their low levels, downstream buyers have been replenishing their inventories opportunistically at lower prices, leading to a slight increase in rigid demand procurement volumes and providing short-term support for spot prices.
2. Overall demand in the terminal real estate, infrastructure, and coatings industries remains weak, with no significant increase in downstream finished-product orders. Downstream factories are only maintaining safety stock levels and are unlikely to engage in large-scale inventory buildup, making it difficult for acrylic acid prices to continue soaring sharply.
3. If the price of acrylic acid rises rapidly, the profit margins for downstream processing will be quickly compressed, and at that time, downstream sectors will reduce purchases and consume inventory as needed, directly suppressing the room for price increases of acrylic acid.
III. Market Outlook
From a technical perspective, the 10-day moving average of acrylic acid in China bottomed out at the beginning of the week and quickly turned upward, showing a trend of crossing above the 20-day moving average. With the price surging significantly for two consecutive days, the positive average difference has increased, indicating a strong short-term rebound trend. However, auxiliary indicators show that the current 10-day position of acrylic acid in China has reached a "high level," while the 20-day, 30-day, and 60-day positions, which are medium- to long-term, still remain at "medium-low" or "low" levels. This suggests that although the short-term momentum is strong, it still faces pressure from the long-term moving averages, and the upside potential may be limited.
Considering the strong cost support from propylene—a key raw material—coupled with lingering concerns about the sustainability of downstream demand, analysts believe that acrylate prices are likely to remain relatively stable and firm in the short term. Going forward, market participants should pay close attention to the trend of upstream propylene prices as well as the order intake situation at downstream factories, as these will be the key variables influencing cost pass-through and short-term market sentiment. Once the phased restocking demand subsides, price increases may face obstacles.
