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Insight | Time: Sep 21 2020 10:48AM
ACN price may have limited downward space in Oct
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Since 2016, the price of acrylonitrile is bound to decline every Oct, especially in Oct 2018, it has fallen down significantly, offset the most increment in Jan-Sep. The reason is that, on the one hand, due to the National Day holiday, downstream buyers' purchasing time is one week less, and the holiday time is longer when there are both National Day and Mid-Autumn Festival. On the other hand, viewed from the cash flow, it has been positive every Oct. Prices are usually dull to move up, and with the shorter time of sales, the downward space for prices enlarges.

However, based on the current situation this year, the price trend of ACN may be changed. Although the sales time is still shorter, the cash flow is mostly negative since the beginning of 2020, as demand has not increased following the capacity expansion of ACN, so most plants take the measures of production cut to control the inventory. Moreover, the firm propylene market makes the ACN profits hard to turn to positive. In a result, ACN prices are forced to rise, and downstream market are not willing to chase the higher feedstock.

Compared with previous years, the largest difference this year is that the cash flow has deteriorated significantly. According to relevant data, among the consumption fields of propylene, polypropylene accounts for about 70%, propylene oxide 7.1%, butanol 6.3%, acrylonitrile 6.2%, acrylic acid 3.8%. %, and cumene 3.7%, and others accounted for 2%. Therefore, even if acrylonitrile production is significantly reduced, its ability to suppress the price of propylene is extremely limited. The reduction in production is a way to reduce the supply and stimulate the market mentality. However, with the gradual advancement of new capacity plans in the future, the influence of this method will gradually weaken. In 2018, when some large plants implement the maintenance plans, the operating rate is averaged at around 80%, while in Jan-Sep 2020, the average operating rate is less than 80%.

In Oct, 2020, Jilin Chemical Fiber has ended its maintenance plan, and it is not likely to shut down again. With the negative cash flow, ACN plant inventory may keep low by virtue of production cut, and prices may still be firm. In addition, Shanghai Secco's 260kta ACN unit plans to be shut down for one month around mid or late Nov. Therefore, its customers may replenish feedstock in Oct. ACN prices are expected to have limited downward space in Oct.
[RISK DISCLAIMER] All opinions, news, analysis, prices or other information contained on this report is provided by analyst of Zhejiang Huarui Information Consulting Co., Ltd (CCFGroup) as general market commentary and does not constitute investment advice. CCFGroup will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
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