Stable acrylic fiber amid rising costs, yet cash flow deterioration raises concerns

Since April, the acrylic fiber market has maintained stable prices despite rising raw material costs. However, this has led to a gradual deterioration in cash flow, with theoretical losses exceeding 1,000yuan/mt. With no indication of cost reductions, there may be further upward pressure on prices, and cash flow may continue to weaken.

Since the National Day holiday in 2023, acrylic fiber prices have remained stable for 195 days, surpassing the previous record of 192 days from April to October 2016. This is attributed to subdued demand, which has hindered price increases. Additionally, raw material prices have generally remained higher than average since early 2023. Consequently, the acrylic fiber industry has limited room for adjustment, with cash flows passively tied to raw material price fluctuations.

Despite the potential for cash flow to weaken further, acrylonitrile prices may continue rising due to supply constraints, while stable acrylic fiber production and prices could expand losses. Given the uncertainty in raw material trends, a passive approach is anticipated over aggressive action. Implementing production cuts and maintaining prices can mitigate raw material strength during shutdowns and aid in reducing downstream inventories, easing pressure in the upcoming off-season.

The post-2024 Spring Festival period did not experience the usual demand-driven price surge. If prices rise in April and May, the adjustment cycle might be delayed, shifting subsequent price fluctuations by one or two months.