In the first week of November, domestic acrylonitrile (AN) market prices surged significantly. The ex-tank price in East China jumped rapidly to 13,000 yuan/ton, an increase of 1,000 yuan/ton compared to the end of October, representing a growth rate of 8.33%. Similarly, the Shandong market saw an 8.97% year-on-year rise to 11,750 yuan/ton. Strong cost-side support was the primary driver behind this price rally. Concurrently, expectations of localized production cuts added upward momentum to the market. Bullish sentiment also facilitated rapid inventory digestion among producers, providing them with favorable conditions to continuously raise their quoted prices.
Looking back at data from the past five years, this peak in AN prices has reached the highest level seen in five years, and notably, the highest since the industry entered its overcapacity cycle. However, the sector has not yet exited this period of oversupply. Since the escalation of tensions in the Middle East, raw material costs have risen across the board. Throughout the year, most of the AN price rallies have been cost-driven, while supply-demand fundamentals have remained weak for an extended period.
Since September, AN production margins have turned negative, with losses deepening in October as per-ton profits dropped to a minimum near -3,000 yuan/ton. Prolonged operating losses have gradually eroded producers' willingness to maintain high utilization rates. Consequently, after propylene feedstock prices rose to approximately 12,000 yuan/ton, AN plant production cut plans were swiftly put on the agenda. Anqing Petrochemical announced a delay in restart plans, followed by Sierbang reducing loads to below 50%, and Kelur confirming the shutdown of one production line. Additionally, Shandong Haijiang indicated readiness to reduce loads or halt operations at any time. As cost pressures mounted and production cut expectations became clearer, traders and downstream users began restocking in late October, leading to rapid inventory depletion at AN plants in Shandong.
The combination of loss pressures and low inventories provided AN suppliers with strong incentives to push prices higher. Spot prices in Shandong continued to rise rapidly starting last weekend. At the beginning of this week, Sinopec’s posted price increased substantially, further stimulating bullish market sentiment. The spot market subsequently exhibited a trend of reluctant selling and high asking prices.
However, as AN prices continued to climb, resistance from downstream users intensified. Acrylic fiber enterprises reported already being in a loss position, and the purchasing enthusiasm of acrylamide plants for high-priced materials declined noticeably. Furthermore, following the announcement of US midterm election results this week, international crude oil prices fell sharply, causing propylene feedstock prices to retreat gradually. This significantly weakened the primary driver behind the current AN price rally, prompting the market to begin declining again. In the short term, AN prices are expected to maintain a downward trend. Nevertheless, considering the volatility in raw material price trends, the lack of pressure on current industry inventories, and the possibility of further supply reductions, the pace of the market decline may be relatively moderate.
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