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Insight | Time: Nov 4 2019 3:16PM
How will ACN fare amid improved supply and demand in November?
 
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After the supply recovered and increased, ACN market was in a downward trend, and it largely decreased in October. By Oct 28, CCF price index dropped by 1,850yuan/mt to 10,800yuan/mt from 12,650yuan/mt at the beginning of this month, with a decrease of 14.6%.

In November, Sinopec Anqing is likely to be in maintenance, so the supply is estimated to slip by around 17.5kt. Sailboat Phase II and Shandong Haili produce normally, and the supply for export sales may be at around 29kt this month. Relatively speaking, the gap is expected to be filled, but the overhaul may descend the sales pressure on plants to some extent.

For demand, ABS operating rate was at a high level of around 90% at present, so the space for it to rise was limited, and the probability of being stable to moving down was relatively large. In terms of acrylic fiber, November is a period for adjusting prices before the preparing inventory market before the Spring Festival, so plants may have plans to adjust down prices. Under the background of the possibility of declining prices, the expectation of preparing inventory may be restricted. Thus, the operating rate is likely to keep steadily at a low level even though the shut-down units of Jilin Chemical Fiber may restart in November. In addition, it makes limited effects on rising industry operating rate, and plants are estimated to continue to control inventory. Therefore, in the case of supply and demand, although the oversupply pattern may be improved in November, it is anticipated that no substantial change occurs.

From the terminal, due to the poor global economic situation, the performance of industries such as automobile and clothing may be generally poor this year.
Figure 1. Export value of textile and garment in the first three quarters of 2019
  Textile and garment Textile Garment
Export value (USD billion) 201.95 89.16 112.79
Y-o-y change (in USD) -2.71% -0.07% -4.70%
Y-o-y Change (in RMB) 2.44% 5.27% 0.31%


Figure 2. Export value of textile and garment in September
  Textile and garment Textile Garment
Export value (USD billion) 24.52 9.765 14.755
Y-o-y change (in USD) -7.59% -7.69% -7.53%
Y-o-y Change (in RMB) -5.33% -5.42% -5.27%


Thus, the demand weakness of end-users directly affected the order acceptance of yarn plants, and had adverse impacts on the whole industrial chain. However, progress was made in Sino-US trade talks, which may improve the market mentality. Besides, the weather is getting cold, the thermal advantages of acrylic fiber is expected to show, so the demand of end-users may pick up.

Generally, the overall pattern in November is anticipated to rebound compared with October. However, it takes time to have substantial changes. On the one hand, it needs time for the orders placed by end-users to be transferred to ACN industry. On the other hand, sales channels need to be broadened. In recent years, new units are consistently put into production, so ACN sales pressure is likely to gradually ascend.
[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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