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[Industry Focus]：New Trends in Acrylonitrile Market: Supply and Demand Balance Challenges under Capacity Expansion

Read： 237 Time：2months ago Source：Olefins and high-end downstream

1. market status: profits fall to near cost line, transaction center of gravity fluctuates

recently, acrylonitrile price in the early rapid downward trend, industry profits have fallen to near the cost line. In early June, although the decline in the acrylonitrile in stock market slowed down, the focus of transactions still showed a downward trend. With the overhaul of the Krul 260000-ton/year plant, the in stock market gradually stopped falling and stabilized. Downstream procurement was mainly based on rigid demand. The overall transaction center of gravity of the market showed a stalemate and stable state at the end of the month. Traders generally hold a cautious wait-and-see attitude, lack of confidence in the future, and there are still lower prices in some markets.

2. supply-side analysis: double increase in production and capacity utilization

the output increased significantly: in June, the output of acrylonitrile plant in China was 316200 tons, an increase of 9600 tons over the previous month, an increase of 3.13. This growth was mainly due to the resumption of multiple domestic installations.

Capacity utilization rate increased: the operating rate of propylene nitrile was 79.79 percent in June, up 4.91 percent month-on-month and 11.08 percent year-on-year. The increase in capacity utilization indicates that manufacturers are trying to increase output to meet market demand.

Future supply expectation: Shandong Krul's 260000-ton/year maintenance unit is scheduled to restart in early July, and there is no change plan for the rest of the unit. On the whole, the supply is expected to remain unchanged in July, and acrylonitrile plants are facing shipment pressure, but some companies may take measures to reduce production to cope with the contradiction between market supply and demand.

3. downstream demand analysis: steady change, demand off-season impact significantly

ABS industry: in July, some domestic ABS units have production reduction plans, but the new unit is still expected to be put into production. At present, ABS in stock inventory is high, downstream demand is in the off-season, supply consumption is slow.

Acrylic industry: Acrylic capacity utilization increased by 33.48 to 80.52 percent month-on-month, with a significant year-on-year increase. However, as large factories still have shipping pressure, the operating rate is expected to hover around 80%, and the overall demand side is relatively stable.

Acrylamide industry: Acrylamide capacity utilization increased by 7.18 to 58.70 percent month-on-month, with an increase year-on-year. But demand transmission is slow, enterprise inventory accumulation, operating rate adjusted to 50-60%.

4. import and export situation: production growth leads to a decrease in imports and an expected increase in exports

decrease in imports: A significant reduction in domestic production in the early period led to a tight local supply, which in turn stimulated the phased growth of imports. However, since June, with the resumption of multiple sets of domestic factories, imports are expected to decline, estimated at 6000 tons.

Export volume increased: China's acrylonitrile export volume was 12900 tons in May, down from the previous month. However, with the growth of domestic production, the export volume is expected to increase in June and the following months, estimated at 18000 tons.

5. future outlook: supply and demand double increase, prices or weak stable operation

supply and demand: 2023-2024 is still the peak period of propylene production capacity, and acrylonitrile production capacity is expected to continue to grow. At the same time, the new capacity of downstream ABS and other industries will be gradually released, and the demand for acrylonitrile will increase. But on the whole, the growth rate of supply may still be faster than the growth rate of demand, and the situation of oversupply in the market is difficult to change quickly.

Price trend: Under the trend of double increase in supply and demand, the price of acrylonitrile is expected to maintain a weak and stable operation. While new downstream capacity may provide some demand support, the price pivot may be slightly lower than in 2023, given the expected slowdown in the global economy and resistance to exports.

Policy impact: The increase in China's acrylonitrile import tariffs from 2024 will directly benefit the digestion of excess domestic acrylonitrile resources, but it also requires domestic suppliers to continue to seek export opportunities to balance market supply and demand.

To sum up, the acrylonitrile market is currently in a weak and stable operation state after experiencing a rapid decline in the early stage. In the future, with the continuous increase of supply and the gradual release of downstream demand, the market will face certain supply and demand pressure.

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