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Insight | Time: Jul 17 2020 11:21AM
Acrylic fiber unlikely to fall with ACN in July
 
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Recently, acrylonitrile has fallen faster, especially in the spot market. When the offers of the producers were still above 8,000yuan/mt, some offers in the market has fallen below 7,500yuan/mt. Considering the sufficient market supply, the market players had to lower prices to complete the planned sales volume. Besides, some market players may try to lower the contract settlement prices through the low spot transaction price. But in general, the downward trend of acrylonitrile is already a fact on the board. Under this background, whether acrylic fiber will follow down needs to be considered from several aspects.

Acrylic fiber suppliers usually lower the quotation in June and July, the traditional off-season of the industry, but for this year, acrylic fiber prices rose the strong pull of acrylonitrile and new overseas orders after the resumption of work under the control of pandemic. Judging from the rhythm of the price adjustment cycle, generally after the price increase, it is necessary to stabilize for at least one month for upstream and downstream adjustments, so if acrylonitrile falls back, acrylic fiber prices are likely to keep stable. As for August, there are two concerns: 1. Will the acrylonitrile producers increase prices under losses; 2. Will the demand for acrylic fiber recover.

From the perspective of cost, based on the market price of acrylonitrile at 7,500yuan/mt and the wet spinning processing cost of 4,000yuan/mt, the cost of acrylic staple fiber is about 11,500 yuan/mt. Currently, Shanghai Petrochemical’s acrylic staple fiber prices are at 11,700yuan/mt, Jilin Petrochemical’s ASF prices at 11,900yuan/mt, the price-cost spread is only 200-400yuan/mt, indicating limited downward space.

According to survey on the downstream plants, most of the producers hope the raw material price could keep stable considering the raw materials stock prepared earlier and future sales. 

From the price adjustment cycle and cost perspective, acrylic fiber prices may not fall in July. However, after the new capacity of acrylonitrile is put into production, the producers will face larger pressure to keep price stable. In the future, whether the price can be controlled within the stable range is not yet known, that is to say, how much room for the downside of acrylic fiber is still inconclusive. Thus, although acrylic fiber prices may probably keep stable in July, the future trend still needs to be determined from various aspects.
[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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