1、 Market situation: Profit drops near the cost line and trading center fluctuates

Recently, the acrylonitrile market has experienced a rapid decline in the early stages, and industry profits have fallen near the cost line. In early June, although the decline in the acrylonitrile spot market slowed down, the trading focus still showed a downward trend. With the maintenance of the 260000 ton/year equipment at Coral, the spot market has gradually stopped falling and stabilized. Downstream procurement is mainly based on rigid demand, and the overall transaction focus of the market has remained stagnant and stable at the end of the month. Businesses generally adopt a cautious wait-and-see attitude and lack confidence in the future market, with some markets still offering lower prices.

2、 Supply side analysis: dual increase in output and capacity utilization

Significant increase in production: In June, the production of acrylonitrile units in China was 316200 tons, an increase of 9600 tons from the previous month and a month on month increase of 3.13%. This growth is mainly due to the recovery and restart of multiple domestic devices.

Capacity utilization rate improvement: The operating rate of acrylonitrile in June was 79.79%, a month on month increase of 4.91%, and a year-on-year increase of 11.08%. The increase in capacity utilization indicates that production enterprises are striving to increase output to meet market demand.

Future supply expectations: The maintenance equipment of Shandong Korur with a capacity of 260000 tons/year is scheduled to restart in early July, and there are no plans to change the remaining equipment at the moment. Overall, the supply expectation for July remains unchanged, and acrylonitrile factories are facing shipment pressure. However, some companies may adopt production reduction measures to cope with market supply and demand contradictions.

3、 Downstream demand analysis: Stable with changes, significant impact of off-season demand

ABS industry: In July, there were plans to reduce production of some ABS devices in China, but there are still expectations for the production of new devices. At present, ABS spot inventory is high, downstream demand is in the off-season, and the consumption of goods is slow.

Acrylic fiber industry: The utilization rate of acrylic fiber production capacity increased by 33.48% month on month to 80.52%, with a significant increase year-on-year. However, due to the continued shipment pressure from large factories, it is expected that the operating rate will hover around 80%, and the overall demand side will be relatively stable.

Acrylamide industry: The utilization rate of acrylamide production capacity increased by 7.18% month on month to 58.70%, with a year-on-year increase. But demand transmission is slow, enterprise inventory accumulates, and the operating rate is adjusted to 50-60%.

4、 Import and export situation: Production growth leads to a decrease in imports, while exports are expected to increase

Reduced import volume: In the early stage, domestic production significantly decreased, leading to local supply tightness and stimulating phased import growth. However, starting from June, with the resumption of multiple sets of equipment in domestic factories, it is expected that the import volume will decline, estimated at 6000 tons.

Export volume increase: In May, China’s acrylonitrile export volume was 12900 tons, a decrease compared to the previous month. However, with the increase in domestic production, it is expected that the export volume will increase in June and beyond, with an estimated 18000 tons.

5、 Future outlook: Double increase in supply and demand, prices may remain weak and stable

Supply and demand relationship: From 2023 to 2024, propylene production capacity remains at its peak, and it is expected that acrylonitrile production capacity will continue to grow. At the same time, the new production capacity of downstream industries such as ABS will gradually be released, and the demand for acrylonitrile will increase. However, overall, the growth rate of supply may still be faster than the growth rate of demand, making it difficult to quickly change the situation of oversupply in the market.

Price trend: With the trend of dual increase in supply and demand, the price of acrylonitrile is expected to maintain a weak and stable operation. Although the increase in downstream production capacity may provide some demand support, considering the slowdown in global economic expectations and the resistance faced by exports, the price center may slightly decrease compared to 2023.

Policy impact: Starting from 2024, the increase in import tariffs on acrylonitrile in China will directly benefit the digestion of excess domestic acrylonitrile resources, but it also requires domestic suppliers to continue seeking export opportunities to balance market supply and demand.

In summary, the acrylonitrile market is currently in a weak and stable operating state after experiencing a rapid decline in the early stage. In the future, with the continuous increase in supply and the gradual release of downstream demand, the market will face certain supply and demand pressures.