[Industry Focus]：Chemical market prices continue to fall, why vinyl acetate profits are still high

Chemical market prices continued to fall for about half a year. Such a long period of decline, under the premise of persistently high oil prices, has led to an imbalance in the value of most links in the chemical industry chain. The more industrial chain terminals, the greater the pressure on industrial chain costs. Therefore, many chemical products are currently in a state of high cost but low consumer market, resulting in poor production economy of many chemical products.

The market price of vinyl acetate also fell continuously. In recent years, the market price of vinyl acetate has fallen from 14862 yuan/ton in June 2022 to June 2023, falling for nearly a year in a row, with the lowest price falling to 5990 yuan/ton. Judging from the price trend of the past few years, the lowest price in history appeared in April 2020, the lowest price appeared in 5115 yuan/ton, the highest price appeared in November 2021, and the highest price appeared in 16727 yuan/ton.

Although the price of vinyl acetate has been falling for a year, the production profit of vinyl acetate has always been high, and the production economy is good. Why can vinyl acetate maintain a high degree of prosperity?

according to the changes in the profit margin of ethylene vinyl acetate, the profit margin of ethylene vinyl acetate has been profitable in the past few years, with the highest profit margin reaching 50% and above and the average profit margin level of about 15%. As you can see, ethylene vinyl acetate has been a relatively profitable product over the past 2 years, with a good overall business climate and a stable profit margin.

In terms of calcium carbide vinyl acetate, in the past two years, except for the period of March 2022 and July 2022, when there was a substantial profit, the other time was in a state of loss. As of June 2023, the profit margin level of calcium carbide vinyl acetate was a loss of about 20 per cent, and the average profit margin of calcium carbide vinyl acetate over the past two years was a loss of 0.2 per cent. As you can see, the calcium carbide method of vinyl acetate is not good, the overall loss of the state.

As you can see, it is not common for vinyl acetate to be at a high level of profitability, with only the ethylene method of vinyl acetate production, which is currently profitable, while the calcium carbide method has been losing money over the past few years.

1, raw material costs in different production processes in different proportions. In ethylene acetate, the unit consumption of ethylene is 0.35 and that of glacial acetic acid is 0.72. According to the average price level in June 2023, the proportion of ethylene in ethylene acetate is about 37% and that of glacial acetic acid is 45%. Therefore, the price fluctuation of glacial acetic acid has the greatest impact on the cost change of ethylene acetate, followed by ethylene.

As for the cost of calcium carbide vinyl acetate, calcium carbide accounts for about 47% of the cost of calcium carbide vinyl acetate, and glacial acetic acid accounts for about 35% of the cost of calcium carbide vinyl acetate. Therefore, in the calcium carbide vinyl acetate method, the change in the price of calcium carbide has a greater impact on the cost, which is very different from the cost impact of the ethylene method.

2, raw materials ethylene and glacial acetic acid decreased significantly, resulting in a significant reduction in costs. According to relevant data, in the past year, CFR Northeast Asia ethylene prices fell 33%, glacial acetic acid prices fell 32%. However, the production cost of calcium carbide vinyl acetate is mainly limited by the price of calcium carbide. In the past year, the price of calcium carbide has fallen by 25%.

Therefore, from the two different production processes, the raw material cost of ethylene vinyl acetate is greatly reduced, and the cost reduction is greater than that of the calcium carbide method.

3, although the price of vinyl acetate has decreased, but the decline is not as large as other chemicals. In the past year, the price of vinyl acetate has fallen by 59%, which looks like a big drop, but the price of other chemicals has fallen even more.

Vinyl acetate has maintained a certain profit margin, mainly because of the cost reduction caused by the decline in raw material prices, rather than the support of the consumer market for its price, which is also the current situation of value transmission in the vinyl acetate industry chain. Judging from the current situation of China's chemical market in the short term in the future, if there is no large-scale consumer market stimulus policy, it is difficult to fundamentally change the weak state of China's chemical market. It is expected that the vinyl acetate value chain will continue to maintain the downward pass logic, it is expected that future production profits in the end-consumer market, especially polyethylene and EV products, will be maintained by reducing the profit of vinyl acetate.