Since mid-July, domestic acrylonitrile market prices have been continuously climbing, with ex-tank prices at East China ports rising from 9,350 yuan/ton to the current 11,350 yuan/ton, an increase of 21.4%. The price rally was initially driven by cost-side factors, followed by successive supply-side developments. Unstable conditions in production facilities across both northern and southern regions led to a sustained contraction in supply, pushing acrylonitrile prices higher even as costs declined significantly.
Specifically, in early July, the acrylonitrile market continued to decline amid ample supply and weak demand. However, costs then surged sharply, with propylene prices climbing to around 9,000 yuan/ton, narrowing the price spread with acrylonitrile to less than 1,000 yuan. Loss-making pressure prompted suppliers to hold firm on pricing, and buying followed suit, leading to a market rebound in mid-July. In late July, although raw material costs fell again, favorable supply-side factors emerged. First, Zhenhai Refining & Chemical reduced its operating rate and released plans to cut contract volumes for the following month. Subsequently, Lihuayi's plant experienced a brief shutdown for maintenance due to a malfunction and halted shipments, resulting in a rapid tightening of supply.
Prior to this, the market generally held a bearish outlook for the following month. On one hand, demand remained persistently weak, with the acrylic fiber industry's operating rate declining further. On the other hand, plants such as Si'erbang and Tianchen Qixiang were scheduled to restart and resume operations in August. In the longer term, Zhejiang Petrochemical also planned to release new capacity in September. As a result, downstream users and intermediaries maintained low inventory levels. Even when prices began to bottom out and rebound in mid-July, downstream buyers largely adhered to a demand-based purchasing pace and showed little enthusiasm for building inventories. Consequently, the unexpected supply contraction created a gap in essential demand, driving prices sharply higher.
This year, the acrylonitrile market has been significantly volatile, disrupted by persistent instability in the external environment and compounded by supply-side uncertainties. In the first half of the year, the market was primarily supported by favorable cost-side factors and increased exports. As the second half unfolds, supply-side changes are expected to once again steer market price trends. On one hand, new capacity is set to be released, with Zhejiang Petrochemical's 660,000-ton plant scheduled to gradually come online starting in September. On the other hand, East China, as a major consumption hub, will see intensified competition among large acrylonitrile producers, with ongoing plant fluctuations continuing to impact the overall domestic market.
In the near term, the overall outlook for August remains unclear. Tight supply and low inventory levels will support a firm-to-high market in early August. However, recent rapid price gains have also fostered a fear of high prices. Moreover, as the price spread with raw material propylene widens to over 3,000 yuan/ton, this may encourage acrylonitrile producers to actively increase output, potentially reversing the supply-demand balance. The upward momentum in acrylonitrile prices is expected to be unsustainable, and attention should remain focused on supply-side fluctuations.
Comments
0