In August, the domestic acrylonitrile market price opened significantly higher at 12000-12500 yuan/ton, an increase of 600-700 yuan/ton compared to the end of July. Since the price began to rise in mid July, the current increase has reached 3000 yuan/ton, with a growth rate of 32.1%. The contraction of supply side is the direct factor leading to the market’s sharp rise, coupled with the continuous low inventory in the industry, the concentrated replenishment of intermediaries, the support of crude oil costs, and the willingness of enterprises to repair losses. The passive follow-up replenishment of essential demand buying is released, and the bullish sentiment in the market is concentrated. Production enterprises continue to raise their listing prices, and the focus of spot trading is synchronously lifted. In the off-season, the market is rising against the trend.
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As of August 5th, the ex tank price of acrylonitrile in the spot market of East China ports has reached 12300-12400 yuan/ton, and the Shandong market has also remained at 12000 yuan/ton. The current price has exceeded the market high in the context of the Middle East conflict in April and is also higher than the price surge level stimulated by unexpected supply contraction in the first quarter of last year. The rapid and significant increase in prices this time is not only due to the continuous shortage of spot resources, but also due to the reduction in contract supply, and the simultaneous reduction of supply in the north and south, which stimulates the market to rise significantly.
Continuous low inventory in the acrylonitrile industry
Prior to this round of price increases, the overall inventory of acrylonitrile in the domestic industry was already at a moderately low level. During the first half of July, due to weak demand and increased supply, prices quickly fell back to nearly 9000 yuan/ton. During this period, inventory further decreased to a lower level, especially in acrylonitrile factories where inventory was not high. Subsequently, the price rebounded due to cost push, but due to the general bearish outlook of the industry, low inventory operations were still maintained.
Unplanned parking or reduced load supply of the device, phased centralized reduction in quantity
Starting from late July, domestic maintenance has been concentrated and the supply of goods has significantly contracted. Under the accumulation of sustained low inventory in the early stage, it is difficult to find a single commodity in the acrylonitrile market, which stimulates further price increases.
Entering the first week of August, the acrylonitrile shutdown plant has not yet recovered, and the long-term supply downturn has once again intensified. Zhenhai Refining and Chemical plans to reduce the plant load to 50-60% by mid August, and the main source of goods in East China will be further reduced, strengthening the market’s expectation of long-term shortage in advance. The industry’s capacity utilization rate will remain below 70%. Although some devices are expected to recover in the future, uncertainty still leads to cautious market sentiment, and the prices of holders remain firm at high levels.
Significant increase in production profits
While the price of acrylonitrile is rapidly rising, the upstream price of propylene is showing a downward trend. Among them, the price of propylene in the Shandong market has gradually dropped to 8000 yuan/ton and fluctuated at a lower level, and the price difference between the two has expanded to 4000 yuan/ton. The theoretical profit margin of acrylonitrile production has significantly increased. The considerable profits will drive the active restart and recovery of the shutdown equipment in the future, and the acrylonitrile market is currently consolidating under the expectation of increased supply.
Downstream demand is weak during the off-season
Due to the significant increase in acrylonitrile prices this round, it was mainly driven by the favorable supply side contraction, while the demand side remained flat. The construction of the acrylic fiber sector remains stable, with a need for normalized rigid procurement; ABS、 Downstream mainstream products such as acrylamide have been dragged down by sluggish orders for household appliances and plastic terminals, resulting in a continuous decline in plant production. The overall demand is weak, making it difficult to match the pace of spot price increases. Faced with the rapid rise in raw material prices and the increasing resistance of downstream factories, there is a multi-dimensional demand for on-demand procurement mode, and large-scale hoarding behavior is rare. Therefore, as supply begins to gradually recover, there will be expectations of a downturn in the market, but it is still necessary to pay attention to supply side fluctuations as variables continue to exist.
Future forecast
In mid to late August, Zhenhai Refining and Chemical will increase its efforts to reduce production capacity, while facilities such as Selbang will gradually increase their production capacity. In September, 660000 tons of new production capacity will be gradually put into operation, resulting in a significant increase in overall supply at that time. Overall, it is expected that during the first half of August, due to the low inventory in the industry, the tight balance pattern of domestic spot goods will be difficult to quickly ease. However, as the profit of acrylonitrile production continues to recover, there is a possibility of a slight negative offset gap in some operating units; At the same time, some overseas maintenance facilities have resumed production, and the increase in imported goods has entered the market. The price of acrylonitrile is expected to fall, but it may still maintain a relatively high level of operation. The pace of decline may accelerate in mid to late August as supply resumes. It is recommended that industrial chain enterprises purchase according to their needs, avoid blindly chasing high prices and stocking up, and control their own raw material safety stock.
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