Introduction: In October, the domestic acrylonitrile (AN) supply side is expected to remain loose, with industry operating rates maintained above 70%. Meanwhile, the demand side lacks clear expectations for incremental growth, particularly as the ABS sector continues to operate at low loads. Consequently, fundamentals remain weak, and there is pressure for inventory accumulation during the National Day holiday. However, cost-side support provides a floor, leading to an expectation that the AN market will remain stagnant and slightly bearish, though downside potential is limited.
In October, the AN market is projected to continue in a stalemate between high costs and low demand. While uncertainties on the supply side persist, overall market volatility is expected to narrow.
Supply Side Remains Loose; Industry Operating Rates Hold Above 70%
In October, aside from existing units undergoing maintenance or reducing output, AN producers have no new plans for unit fluctuations. Additionally, Sinopec Tianjin’s 130,000-ton-per-year AN unit has successfully commenced production, bringing the total installed capacity base to 5.681 million tons per year.
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Domestic AN production in October is estimated to reach approximately 395,000 tons, a month-on-month increase of 24,000 tons, or 6.47%. Considering the pressure for inventory buildup during the National Day holiday, this oversupply is expected to lead to a slight downward probe in AN prices.
Limited Expectations for Demand Growth; ABS Sector Continues Low-Load Operation
Entering October, downstream consumption of AN is also expected to rise, but the increment is projected to be limited. The acrylic fiber sector shows a more noticeable increase in load, primarily because Jilin Chemical Fiber’s units have all resumed operations. Conversely, ABS, the largest downstream consumer of AN, continues to suffer from production losses, resulting in extremely limited increases in industry operating rates. Based on downstream startup plans, total downstream consumption of AN in October is estimated at around 310,000 tons, a month-on-month increase of 14,000 tons, which fails to keep pace with the supply growth rate. Furthermore, due to persistent price volatility in AN, downstream users are largely maintaining low inventory levels, resulting in moderate buying enthusiasm.
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Expected Widening Supply-Demand Gap Leads to Stagnant and Weak Market
With supply increments exceeding demand increments, AN fundamentals will remain in a weak state. The risk of inventory accumulation during the long holiday may also prompt spot sellers to lower prices to stimulate sales. However, continuous cost-side pressures and lingering supply-side uncertainties suggest that the market’s downside potential is expected to be limited.
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