Export tax rebate is difficult to shake the acetic acid market

Recently, the Ministry of Finance and the State Administration of Taxation issued a notice on raising the export tax rebate rate for some products, and several products such as acetic acid were listed. However, in my opinion, the export tax rebate policy has limited boost to the acetic acid market. At present, the acetic acid industry chain is gathering momentum, supply is increasing, demand is weak and exports are blocked, and the market may continue to operate in a downturn.

Supply increased substantially. Following the addition of production capacity of 100,000 tons / year in Shandong Yankuang, Tianjin Bohua Yongli and Henan Longyu based on the original equipment in 2018, Dalian Hengli's new equipment of 350,000 tons / year will also be put into production in 2019. In the case of a substantial increase in supply, the acetic acid market has cooled significantly. Take Jiangsu as an example. In 2019, the local mainstream average price fell by more than 35% compared with the previous year, and the theoretical profit of enterprises fell by as much as 70%. This year's Acetic acid market remains dominated, with domestic acetic acid prices falling rapidly in mid-February, and acetic acid prices in East China remained within a narrow range of the lowest level in the past two years until mid-to-late March. In order to change the passive situation, some domestic large-scale installations are planned for overhaul, such as Shandong Yankuang and Nanjing Celanese. In addition, accidental failures of devices such as Jiangsu Thorpe and Tianjin Bohua Wynn are more frequent, and the operating rate of the domestic acetic acid industry has declined, but this has not formed support for market prices. In the short term, the dilemma of oversupply is difficult to change.

The second is the weak demand for support. Affected by the epidemic situation, the operating rate of domestic acetic acid downstream companies has dropped substantially, among which acetates are particularly obvious. During the Spring Festival, most ACETATE enterprises stopped. After the outbreak, the resumption of work has a long delay, even after the resumption of work, the load is also low. Among them, ethyl acetate has a minimum operating rate of 19%; butyl acetate is partially shut down in some stages and has a longer duration; the operating rate of sec-butyl acetate is less than 20% at the beginning of March. The downstream of acetate is mostly in terminal fields such as ink and medicine. It is difficult to restore demand until the impact of the epidemic is completely eliminated.

Another downstream acetate of acetic acid has relatively stable consumption channels due to supporting downstream devices, so the operating rate of the enterprise has not changed much. Recently, with the effective control of the domestic epidemic situation, the downstream production enterprises have gradually resumed work. The demand side has improved significantly compared with February, but the production of terminal factories is still insufficient. The weak demand for raw materials has increased the pressure on the acetic acid market.

Third, exports continue to be blocked. In response to the epidemic, some countries or regions have successively adopted measures to "close the country" or "close the city", involving Malaysia, the Philippines, India, Thailand, South Korea, Vietnam and other major export destinations of China's acetic acid. Judging from the currently published export data for January-February, domestic acetic acid exports showed a sharp decline with a decrease of nearly 27%; affected by foreign epidemics, some export orders in March have not yet been completed; acetic acid exports in April are expected to fall to historically low It is reported that nearly 20,000 tons of export orders were cancelled in early April. The reduction in exports is a foregone conclusion, which undoubtedly aggravated the pressure on the production and marketing of the domestic acetic acid market.