Although the industry’s capacity utilization rate has decreased this week, the overall supply remains abundant, and with the launch of new production capacity in Jihua, there is still insufficient spot buying gas, and local inventory pressure exists. The market is weak and difficult to change, and it will fall back again. As of August 15th, the mainstream negotiation for container self pickup at East China ports is between 8200-8300 yuan/ton, a decrease of 100 yuan/ton from last week; Short distance delivery to the Shandong market is negotiated at around 8050-8150 yuan/ton, a decrease of 100 yuan/ton from last week.
Capacity utilization rate has decreased but overall supply remains saturated:
During the week, the 92000 tons of acrylonitrile installed by Fushun Petrochemical in the northern market was shut down for maintenance for 45 days starting from August 10th. However, Jilin Petrochemical’s 260000 tons/year new unit was put into operation on August 12th, and the total domestic acrylonitrile production capacity base was adjusted to 5.449 million tons/year, resulting in a decrease in the overall capacity utilization rate of the industry.
However, the weekly production has not changed much, the overall supply is still saturated, the demand for spot goods is insufficient, and the inventory of some enterprises has increased. According to statistics, as of August 14th, the weekly capacity utilization rate of domestic acrylonitrile factories was 72.45%, which was -1.89% compared to the same period last week. The weekly output was about 81000 tons, a decrease of 0.01 million tons from the previous cycle. The total inventory was about 45500 tons, which was+0.1 million tons compared to last week.
Downstream purchasing power is still insufficient:
The capacity utilization rate of major downstream industries of acrylonitrile has decreased, among which the capacity utilization rate of ABS is 71.10%, unchanged from last week; Capacity utilization rate of acrylic fiber enterprises: 76.88%, compared to last week -0.46%; Acrylamide production capacity utilization rate: 47.64%, compared to last week -0.35%. Overall, the operating rate of small and medium-sized downstream industries has decreased, and there is still insufficient procurement of raw material acrylonitrile. The atmosphere of spot transactions in the market is still average.
The price of propylene has significantly increased:
During the cycle, the upstream propylene price significantly increased, leading to an increase in the cost of raw materials for acrylonitrile production. At the same time, acrylonitrile prices fell again, exacerbating the production loss situation this week. According to statistics, the average production cost of acrylonitrile this week was 8937 yuan/ton, a month on month increase of 2.87%. The average profit of acrylonitrile production during the same period was -632 yuan/ton, with a month on month increase of -214 yuan/ton.
Overall, although cost support has been strengthened, Jilin Petrochemical’s 260000 tons/year new facilities have been put into operation one after another, releasing new production capacity, and the overall supply is still abundant. However, spot gas purchases continue to be insufficient, and local inventory pressure exists. Under the game of supply, demand, and cost, the market amplitude is narrow and weak in the short term.
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