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Insight | Time:Sep 22 2017 9:47AM
The hike journey of China's acrylonitrile
 
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Since 2016, China ACN prices have been constantly increasing, and from mid-July 2017, the prices begin to go up straightly. Till Sep 20, ACN prices have risen from 10,700yuan/mt in mid-Jul to 15,000yuan/mt, with a sharp increment of 40.2% in two months and the upward trend does not show turning signal. We make some analysis on this round of upswing.

On one hand, the increment is large. The ACN prices have hit the highest level since 2016 and may continue to step upward. The upswing is mainly attributed to the supply tightness caused by plant closures and output reduction. PetroChina Jilin's 106kta No. 1 ACN unit and 120kta No.3 ACN unit were closed on Jun 12 and Aug 9 respectively. Sinopec Qilu’s 80kta ACN unit has shut in late July. Moreover, Shanghai Secco cut its output about 4,000-5,000 tons per month during Jun and Aug and in Sep, the reduction was 9,000 tons. Therefore, supply is supposed to reduce by 80kt in general and becomes tightening as downstream ABS and AM market sales are moderate during the period. Moreover, the global market also faces supply shortage affected by the Hurricane in U.S. and prices are also increasing. The supply tightness cannot ease in China and the market is mainly sold with contract goods, with limited spot goods.

On the other hand, the upswing lasts long this time, for over two months and no turning single is seen at present. This is mainly because that the shutdown time for the plants is long. Except Shanghai Secco (closure for its own plan), some plants are affected by the environmental protection rectification. Supply continues to be tight and with the market speculation, ACN prices still have driving force to move up.

Currently, ACN market remains firm. Downstream acrylic fiber plants already cut the operating rate. Hangzhou Bay Acrylic shut its 60kta acrylic fiber unit on Sep 13 for maintenance and may restart in end Sep. Ningbo Zhongxin revised lower its 55kta acrylic fiber unit O/R to 50% on Aug 22. Jilin Chemical Fiber's two units of acrylic fiber units with 300kta cut the operating rate to 70% due to lack of feedstock and Sinopec Shanghai reduces the O/R to 80%. In Oct, PetroChina Jilin’s No. 3 ACN unit may try to resume operation, while Jilin Chemical Fiber is heard to shut its acrylic fiber units for maintenance, no detailed information is revealed. If the turnaround time is long, the supply and demand may tend to stabilize, dampening the ACN market mindset.
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