Acrylonitrile: oversupply and low volatility

　　Compared with the bull market in the first half of last year, the acrylonitrile market this year is obviously much inferior.
Not only does the average price drop by 25.
16% year-on-year, but the overall trend of the market is high and then low.
The price at the end of June fell by nearly 18% compared with the beginning of the year
.

　　Cui Beibei, analyst of Jinlianchuang: The losses are intensified when the shock is down

　　Entering 2022, acrylonitrile started at the high point of the year, and then the market fell endlessly, and traders sold goods at low prices
.
This decline lasted until mid-to-late February, and the acrylonitrile market showed signs of stabilization and recovery, but the rebound did not start.
The price of acrylonitrile fell from 13,300 yuan at the beginning of the year to 11,200-11,400 yuan
.

　　In March, the acrylonitrile market rose as a whole in the first three weeks, with the highest price running to 11,800 yuan, and then a slight decline
.
The average monthly price of acrylonitrile was 11,600 yuan, a month-on-month increase of 4.
54%
.
The main support for this rally comes from the cost side.
At the same time, Secco, Haijiang and Keluer have maintenance plans, and the expected supply reduction also gives positive support to the acrylonitrile market
.

　　From April to May, the market price of acrylonitrile fluctuated around 11,300 yuan
.
In April, the average market price of acrylonitrile was 11,600 yuan, which was basically the same month-on-month
.
The average price of acrylonitrile in May was 11,500 yuan, which remained little changed compared with the previous two months
.
During this period, transportation restrictions have affected corporate shipments and inter-regional cargo turnover
.
Downstream demand was also weak, and market activity declined
.
However, the export volume of acrylonitrile has increased significantly, coupled with the continued high price of raw materials, the market fluctuations are limited in the confrontation between long and short
.

　　In June, the acrylonitrile market fluctuated downward.
The average spot price was 10,900 yuan, down more than 5% month-on-month, and the year-on-year drop was as high as 25.
16%
.
The overall downstream demand is weak, and the export volume has decreased month-on-month, which has led to a collapse in the acrylonitrile market
.

　　From the perspective of profit, except for January, the acrylonitrile industry was in a state of cost inversion in the rest of the month
.
In January, the factory's profit per ton of product was only 507 yuan
.
Since February, the loss of the acrylonitrile industry has gradually increased, with a loss of 424 yuan in February and a loss of 483 yuan in March
.
The average loss of acrylonitrile in the second quarter was 636 yuan, in sharp contrast to the overall profit of nearly 3,000 yuan in the first half of last year
.

　　Jilin Petrochemical salesman He Junsong: Supply and demand imbalance cost pressure

　　The main source of the weakness of the acrylonitrile market this year is the imbalance between supply and demand
.

　　Since 2021, there have been many new installations for acrylonitrile
.
In the first half of this year, the production capacity of Lihuayi’s 260,000 tons/year and Tianchen Qixiang’s 130,000 tons/year units were released.
In addition to the units that were put into operation in the second half of last year, the new acrylonitrile production capacity was 1.
04 million tons/year, accounting for 1.
5 million of the current production capacity.
41.
6%
.

　　Acrylonitrile production capacity has grown significantly, but the downstream industry has not been able to follow up in time
.
According to the statistics of Jinlianchuang, acrylonitrile is mainly used to produce acrylonitrile-butadiene-styrene terpolymer (ABS), acrylic fiber, acrylamide and other products
.
The capacity growth of these products is not obvious from 2020 to 2022.
Among them, in the first half of 2022, ABS added 150,000 tons/year of LG Huizhou plant, which can only consume 37,500 tons/year of raw material acrylonitrile
.
It is difficult for downstream demand to digest the rapid increase in production capacity of acrylonitrile, resulting in increased production and sales pressure on manufacturers
.

　　In addition, the repeated epidemics have led to increased pressure on factory inventories
.
Entering 2022, the acrylonitrile market will always be in a stage of oversupply.
Enterprises and social inventories will accelerate the accumulation at the end of the first quarter.
Logistics in East China and Shandong have basically stopped, and downstream production has also been reduced in large areas
.
The pressure on the inventory of acrylonitrile factories continues to increase, and the policy of price reduction and promotion has been continued
.

　　In addition, the high price of raw material propylene continues to erode the profit margin of the acrylonitrile industry
.
In the first half of the year, the average market price of propylene was 8,198 yuan, up 3.
61% from the same period last year
.
Under the obstruction of cost transmission, the acrylonitrile industry continued to lose money
.

　　Longzhong information analyst Wang Yaxin: raw materials dominate the market at a low level

　　In the second half of the year, China's acrylonitrile market will continue to fluctuate at a low level.
The "Golden Nine Silver Ten" may have a band upward performance, but the price range may not be as good as the first half of the year
.

　　In the second half of the year, both PetroChina and CNOOC have plans to launch new production capacity, and the supply of acrylonitrile is still expected to rise
.
Downstream, only ABS is expected to put into production new units, but the new ABS units planned to be put into operation have also delayed the start-up time, so the overall demand for acrylonitrile is limited
.
Under the mismatch of supply and demand, the contradiction between supply and demand of acrylonitrile will continue to increase, the price war will become more and more fierce, and the market may continue to bottom
.
In July, the price of acrylonitrile has fallen below 10,000 yuan, and the difficulty of market reversal has increased
.

　　Since acrylonitrile is mostly below the cost line, the trend of raw material propylene has become the main factor affecting the acrylonitrile market in the second half of the year
.

　　The trend of related raw materials in the propylene market in the second half of the year is expected to decline, and the high cost situation is expected to ease
.
From the perspective of supply and demand performance, the release of new production capacity has put pressure on the market
.
In the second half of the year, the domestic propylene industry is expected to still release 5.
91 million tons/year of production capacity
.
The propylene downstream capacity to be put into operation is estimated to be 4.
68 million tons per year, which is less than the propylene production capacity
.
Therefore, the contradiction between supply and demand is still the main contradiction that the propylene industry will face in the second half of the year
.

　　In the third quarter, polypropylene and propylene oxide plants were put into operation downstream of propylene.
In addition, changes in demand for "Golden Nine Silver Ten" may drive propylene prices to rise
.
However, the fourth quarter returned to the off-season, and when the market force majeure increased in winter, the propylene market was expected to weaken
.
On the whole, the price of propylene in the third quarter is expected to be higher, but considering that the overall profitability of the downstream is difficult to improve, the market may still be dominated by weakness
.

　　If the price of propylene remains around 8,000 yuan in the second half of the year, the acrylonitrile market may stop falling
.
If the price of propylene continues to fall, under the pressure of excess supply, the acrylonitrile market may continue to decline
.

　　(This series ends here)