Reasons behind the decline of China acrylonitrile

China ACN prices start to decline since Dec, 2021, and the decrement is obvious. Since early Dec, China ACN price dipped from 15,300yuan/mt to 12,000yuan/mt, with a decrement of 21.6%, largely erasing the increment of 2021.

The primary for the decrease is the apparent increase on supply. Since Dec, except Zhejiang Petrochemical's 160kta under maintenance, other plants all ran normally. Moreover, in end Dec, Jiangsu Sailboat started up its Phase III 260kta ACN unit, and Shandong Lihuayi’s 260kta new unit also had on-spec products recently. The supply increase made the market bearish.

From the prospective of demand side, after experiencing sharp decline and de-stocking, acrylic fiber supply is limited overall. Spinners sit on the sidelines to watch the influence of lower ACN on acrylic fiber market, and are cautious to replenish acrylic fiber. Though acrylic fiber sales improve slightly, operating rate is hard to rise. In addition, with the epidemic in Zhenhai and Beilun of Ningbo, the restart of Ningbo Zhongxin is delayed. Operating rate of acrylic fiber keeps at around 40%. ABS contributes a large share of feedstock demand, but it maintains above 90% for long time, the support to ACN market is limited. For AM, dampened by the decline of feedstock and unfavorable sales, the production is hard to increase.

From the prospective of market mindset, since the second half year of 2021, bearish anticipation has been covered on ACN market for all the time. However, supply reduces with plant shutdowns, so prices have not declined. This round of decline may be stated the bearish anticipation previously.

From the prospective of operation, the costs of ACN are around 10,000yuan/mt currently. Under the bearish sentiment, the decline is favorable for the downstream purchasing, and is good for the market to figure out the sales strategy after the Spring Festival holiday. Nevertheless, the actual settlement prices are still not confirmed.

Therefore, this round of decline is affected by many factors. After the start-up of Lihuayi, demand has not increased much, and profitability of ACN may reduce gradually. The influence from supply reduction may weaken, while the influence from the propylene may enlarge gradually.