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[Industry Focus]：Acrylonitrile analysis in the first half of 2022 showed a large increase in production capacity, light demand and market decline. In the second half of the year, there may be a high point in August.

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2022 acrylonitrile industry ushered in a capacity release cycle, the year-on-year growth rate of production capacity exceeded 10%, supply pressure is increasing. At the same time, we see that the impact of the outbreak, the demand side is not satisfactory, the industry's decline led, bright spots are difficult to find.

2021-2022年国内丙烯腈市场价格走势图.jpg

Data source: Jin Lianchuang

In the first half of 2022, the domestic acrylonitrile market showed a decline and then a wide range of shocks. Take the East China market as an example. In the first half of 2022, the average price was 11455 yuan/ton, a year-on-year decline of 21.29%. The highest price was 13100 yuan/ton, which appeared in January, and the lowest point was 10800 yuan/ton, which appeared in June.

The main factors affecting the market are:

1. supply increased. 2022 is still the domestic acrylonitrile centralized expansion year, put into production 2 sets of acrylonitrile plant, the total production capacity of 390,000 tons/year, including Lihuayi 260,000 tons/year, Tianchen Qixiang 130,000 tons/year. Although the export volume in January-May rose 12.1% year-on-year, but supply and demand still tend to loose development.

2. outbreaks have repeatedly led to increased factory inventory pressure. Since entering 2022, it has always been in the stage of oversupply. Enterprises and social inventories have accelerated their accumulation after the impact of unexpected events opened at the end of the first quarter. Logistics in East China and Shandong regions has basically stopped, and there has been a large-scale reduction and shutdown in the downstream. After the demand has weakened, the inventory pressure of acrylonitrile factories has been increasing, and the price reduction promotion policy has been continued.

3. downstream industry demand growth is limited. In the first half of 2022, ABS added LG Huizhou 150,000 tons/year of equipment, using only raw material acrylonitrile 37,500 tons/year, so the growth of downstream production capacity is not as good as the growth of raw materials, so the acrylonitrile plant in the first half of the average start-up in the vicinity of 80%, it can be seen that the factory sales pressure is greater.

the second half of 2022, China's acrylonitrile market will continue the low volatility trend, the overall adjustment space is more limited. In addition, the second half of the year acrylonitrile new capacity increased significantly, supplier volume or continue to rise. However, the downstream only ABS has new equipment is expected to put into production, the overall demand is limited, in the mismatch between supply and demand, acrylonitrile supply and demand contradictions will continue to increase, then the factory start-up is also difficult to improve, large enterprises will purchase negative measures. As acrylonitrile is mostly under the cost line, it is still necessary to pay attention to the trend of raw material propylene. It is estimated that the ex-factory price (market price) in major regions will be 10,000-12,000 yuan/ton, with a high point or in August.

China's acrylonitrile market in the second half of 2022, raw material propylene is the main factor affecting price fluctuations. As the significant expansion of production capacity in the second half of the year is a foregone conclusion, it is difficult for prices to rebound significantly in the second half of the year. Therefore, the price of raw material propylene will become a key factor in determining the price of acrylonitrile. If propylene remains near 8000 yuan/ton, acrylonitrile will be difficult to continue to fall, but propylene prices continue to fall, under the pressure of oversupply, acrylonitrile prices are still likely to decline.

2022-2023, China will add 1.38 million tons/year acrylonitrile plants, and many of them are integrated refining and chemical equipment, which is more likely to be put into production. However, the downstream only ABS develops rapidly, such as acrylic and acrylamide are tepid, which is bound to form an oversupply situation. It is expected that in the next three years, with the expansion of acrylonitrile production capacity, industry profits decline, some new devices are also facing the possibility of delay and stranding.

Source: Jin Lianchuang, China Petroleum and Chemical Industry Big Data

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