Acrylate Market: Weak Demand But High Production Cost

Introduction: The acrylate market has been largely stable with mild changes for a while. All acrylate producers, middlemen and downstream users focus on the coming market. The increasing production cost and tepid demand put the acrylate market into “hot water”.

1. Supply Analysis

In H1 July, two units in East China has restarted and the supply is increasing. Given the weak demand, holders suffer sales pressure and they have to cut prices. Moreover, downstream users operated in actively on the ample supply. Hence, the mainstream price in the acrylate market continues inching down.  

2. Demand: Weak Demand and Strict Environmental Protection Inspection

June and July are the traditional off season for adhesive and coatings. The hot weather led to limited outdoor work. Furthermore, the environmental protection inspection dragged down the demand for acrylate.

3. Production Cost: Increasing Prices of Raw Materials

The propylene and n-butyl alcohol (NBA) markets jumped in July. In North China and Est China, strict environmental protection inspection has made producers to cut outputs. Propylene and NBA prices went up greatly on the tight supply.

The production cost of acrylic acid has reached RMB 6,900/mt. The production coat of butyl acrylate and 2-ethylhexyl acrylate are RMB 9,200/mt and RMB 10,300/mt respectively. The delivery price of acrylic acid is RMB 7,300/mt by acceptance, so the loss of acrylic acid was limited at around RMB 100/mt. The price of butyl acrylate is RMB 8,700/mt by acceptance, and the loss has reached RMB 800/mt or so. Some acrylate producers have reduced operating rate to cut the losses.

On the whole, there are some bearish factors in the acrylic acid and acrylate markets. The demand for acrylate will shrink and the prices are likely to drop, but producers may suffer more losses. So, the acrylate market may see mild rebounds to decline the losses.