China ACN: reasons behind recent rise

From Nov, China ACN prices have not decreased, but climbed up, which is beyond market anticipation. Though some market players expect a firm prices, the increment is still beyond their anticipation. Currently, the highest level has reached around 16,000yuan/mt, and downstream buyers can accept the level of 15,500yuan/mt. The reasons are analyzed below.

First, the shutdown of PetroChina Fushun. PetroChina Fushun has restarted its 92kta unit around Oct 27, but the unit is shut down again around Oct 31, and the restart is not confirmed. The supply is supposed to shrink unexpectedly in Nov.

Second, KoRuhr’s new unit has been put into operation in end Oct, and operating rate is at around 70%, But it is still matching with its firs unit, so the actual delivery volumes may be limited in short, which cannot make up with the gap caused by the shutdown of PetroChina Fushun, leading to higher prices in Shandong market.

For the situation at ports, it is understood that the delivery at Yangkou port is delayed to around mid-Nov, so the supply tightness in Nantong market is hard to ease. At Lianyungang port, though the ships can reach the port and unload, the delivery is still difficult. Therefore, the short-term supply tightness leads to prices up.

Viewed from the market mindset, market players are slightly sensitive about the volatility and with the previous bearish anticipation, there is a difference from the current price upswing. Therefore, prices fluctuate in short.

In general, the rise is mainly caused by the unexpected shutdown of PetroChina Fushun and logistics issue. Pay attention to the time of recovery. If the time prolongs, ACN prices may keep firm, and prices are hard to decrease.