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Insight | Time: Nov 17 2020 2:12PM
How about acrylic fiber market under the upward trend of ACN?
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Region Company Capacity (kta) Shutdown time Reason Maintenance time
Turkey Petkim 90 Jul 21 heat exchanger outage Unknown
South Korea Tongsuh Petrochemical 265 Nov 6 power outage Unknown
Taiwan China Formosa Plastics 260 Jan 8, 2021 planned maintenance Undetermined
South Korea Taekwang Industrial 290 Dec 1 planned maintenance three weeks
Taiwan China China Petrochemical Development Corporation 240 Oct 2 planned maintenance four weeks

In foreign market, the units in the table are currently undergoing maintenance or planned maintenance. The main cause to push up China's ACN prices is the shutdown of South Korean Tongsuh Petrochemical. China Petrochemical Development Corporation's ACN unit will restart in mid or late Nov, then the supply may increase slightly in short. But looking from the table, the most critical unit, Tunghsu has no confirmed restart date, and Taekwang Industrial is about to implement the maintenance plan in Dec, plus Petkim’s long-time shutdown, if the three units have not restarted in Dec, the loss is estimated to be about 48,000 tons.

From a domestic point of view, as Sailboat’s MTO unit will be shut down for maintenance in Dec, its supply to downstream propylene will be affected. Nevertheless, viewed from the current price level of 6,850yuan/mt of propylene, the ACN profits are still seen. Shanghai Secco's 260kta ACN unit will shut down for one month of maintenance from Nov 18. Though the domestic supply will reduce, the reduction is smaller slightly compared with the overseas reduction. But in general, if the output reduction continues, ACN prices still have upward space later. Therefore, some market players anticipate that the ACN prices may rise to 11,000yuan/mt in Dec.

From the perspective of yarn sector, after experiencing the hot situation in Oct, the yarn market has turned thinner in Nov. Although core-spun yarn is still the mainstream product, its price has dropped from a high point, which shows that the end-user demand has weakened. In addition, the acrylic yarn is difficult to achieve a big improvement, and this trend may continue before the next turning point occurs. After the rise in Nov, spinning mills consider that prices have reached a high level. Though feedstock inventory is not high, they are unwilling to replenish acrylic fiber, and mainly procure based on orders. Therefore, acrylic fiber sales are under certain pressure.

In general, there is still room for ACN to move up, while the demand for acrylic fiber is suppressed by its high prices. Acrylic fiber plants are hard to elevate prices due to mild demand. Plants may cut production or reduce operating rate later, and there are two possibilities after that: 1. suppress the growth of ACN prices, but considering that there is a supply reduction in both domestic and overseas markets, it is unlikely that its price will head south; 2. If the reduction in production can compress the yarn market circulation volumes, the acrylic fiber prices are likely to tick up following the ACN market.
[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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