Why Supply Price Of Acrylonitrile Is Difficult To Rise From Supply And Demand Data

After falling for nearly 5 months, the price of acrylonitrile has finally entered the upstream channel in May. The price behind it is the large scale production reduction measures taken by production enterprises under continuous losses. But this time is nearly 1/3. Acrylonitrile price has only increased by less than 500 yuan / ton. The price of the mainstream container trading in East China ports is still below the level of 7000 yuan / ton. Unlike previous borrowing, the price rebound is still weak. Although the factory has already cut production, weak demand coupled with new capacity is expected to make the market face overrisk.

In May, the state of Sibon and Shanghai SECCO halved production. The restart time of the company was delayed, and a line of Jilin Petrochemical was overhauled. Daqing petrochemical and Lanzhou Petrochemical Company were also in a state of parking. Most of the other manufacturers maintained a low load operation. As of May 9th, the average operating rate of the domestic acrylonitrile industry was only 56%, down 23 percentage points from the end of April, representing a decrease of 35 percentage points compared to the same period last year, the lowest level in five years. It is estimated that the total output of acrylonitrile in China in May was 139 thousand and 200 tons (not calculated in Zhejiang Petrochemical), a decrease of about 20 thousand tons compared with April.

While the supply is decreasing, the overall demand for downstream has also increased, but the overall increment is limited. Among them, the opening rate of ABS industry has increased to more than 95%, and the start-up rate of acrylic fiber industry has also increased to 40%, while the acrylamide industry's operating rate has remained near 60%. According to the calculation of the start up situation, in May, the domestic ABS output was estimated at about 330 thousand tons, the consumption of acrylonitrile was about 76 thousand tons, the output of acrylic fiber was estimated at 33 thousand tons, the consumption of acrylonitrile was about 31 thousand tons, the output of acrylamide was estimated at 49 thousand tons, and the consumption of acrylonitrile was about 39 thousand tons. Taking into account the proportion of downstream consumption, the total domestic demand in May is estimated to be between 16-17 tons.

Calculation of acrylonitrile supply and demand balance in May

Unit: 10000 tons

As indicated in the table, the supply of acrylonitrile market is still ample in the May when considering the initial stock and the import of the goods that will impact the domestic market. However, by the end of the month, the stock will drop to a relatively reasonable level near 40 thousand tons. Overall, in spite of the significant reduction in production in May, the overall supply of acrylonitrile did not appear to be in short supply. Moreover, the expected delivery of imported goods plus the new capacity would still make the market still under the pressure of excess, thus restraining the price of acrylonitrile.

However, the price of propylene has risen to more than 6000 yuan per ton in recent years, and acrylonitrile price will continue to push ahead under cost pressure. However, under the situation of weak demand growth, production enterprises will only continue to reduce losses through reducing production. In 2020, this is the year when the acrylonitrile industry began to enter the oversupply phase. Under the situation of the global epidemic and the world economy, the situation of excess supply of acrylonitrile is even more prominent, and the process of reshaping the supply and demand pattern will be more difficult.