This week, domestic acrylonitrile prices have fallen sharply, with ex-tank prices in the East China market dropping from 10,050 RMB/ton last week to around 9,350 RMB/ton, a decline of 7%; in the Shandong market, the price fell by 700 RMB/ton to 9,200 RMB/ton delivered. The fundamental cause of the decline in acrylonitrile prices is persistently weak demand coupled with ample supply. At the same time, suppliers have adopted aggressive price reduction measures during this market fluctuation, further accelerating the downward trend.
Currently, the capacity utilization rate of the domestic acrylonitrile industry remains above 70%. Against the backdrop of weak overall demand during the off-season, supply appears relatively abundant. Additionally, the acrylic fiber industry has seen a further decline in operating rates since July, leading to a further contraction in overall consumption. Since the beginning of this month, downstream users have maintained a just-in-time procurement pace, with particularly insufficient spot buying interest, resulting in sluggish sales in some regions. Moreover, since the latter half of June, acrylonitrile production profits have been considerable, with theoretical single-product profits exceeding 1,000 RMB/ton at their peak. This has also stimulated the timely restart of units at Keluer and Sinochem Quanzhou, as well as the delayed maintenance of Liaoning Jinfa’s facility.
Low costs combined with low demand have gradually intensified bearish sentiment in the acrylonitrile market, with buyers remaining on the sidelines, prompting suppliers to take aggressive price-cutting measures. The rapid decline in acrylonitrile prices has also caused buying to stall, further accelerating the market downturn.
However, at the onset of this market decline, acrylonitrile industry inventories were kept at relatively low levels. Therefore, despite some inventory accumulation recently, overall inventories remain manageable. In addition, the recent strength in raw material propylene prices has once again highlighted cost pressure. Acrylonitrile prices have now fallen near the marginal cost line, reducing suppliers' willingness to continue cutting prices. Furthermore, comparing current spot prices with contract settlement expectations, spot prices have already shown a clear advantage, attracting some buyers to gradually follow up on restocking. As a result, the spot market trading atmosphere has noticeably improved over the past two days.
Looking at the long term, the direction of propylene price fluctuations will continue to provide a floor for acrylonitrile prices, but the fundamental outlook remains far from optimistic. The weak overall demand season is expected to last until around mid-August. In the later period, new capacity will again be brought online, including Zhejiang Petrochemical’s 660,000-ton unit and Sinopec-SK Zhenjiang’s 130,000-ton unit. Therefore, supply surplus will continue to overhang the acrylonitrile market. Apart from external news and supply-side variables, acrylonitrile prices may once again oscillate near the cost line for an extended period.
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