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Insight | Time: Oct 30 2018 3:44PM
How will acrylic fiber market fare under lower ACN prices?
 
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The decline of ACN gradually sharpened since the National Day. Domestic ACN price fell around 1,000yuan/mt or 5.3% by 19 Oct, and an offer was even heard at around 17,000yuan/mt. Meanwhile, acrylic fiber prices remained at a high level. There was a discussion about the inflection point of acrylic fiber in downstream market.

Firstly, from the perspective of cash flow, the poor benefit of acrylic fiber plants were improved due to the rapid decrease of CAN, but it was at a loss on the whole. If ACN were offered at 18,000yuan/mt, the loss of acrylic staple fiber was at around 1,000yuan/mt.


For inventory, Sinopec Shanghai shut down in mid Oct. Hangzhou Bay Acrylic and Ningbo Zhongxin restarted recently, and the overall inventory of Jilin Chemical Fiber has been consumed for a period of time after it shut down for turnarounds in Sep-Oct. According to CCF operating rate index statistics, operating rate of acrylic fiber industry was at around 48% on the whole, and inventory of industry was relatively sufficient.


In terms of downstream market, according to the author, inventory of yarn plants in Shandong was stable temporarily, while some of them sold blended. Some plants at the port moderately reduced inventory and steadily produced core-spun covered yarn and chip yarn. Yarn plants held bearish attitude to raw materials at present, and purchase requirement was restricted to some extents. Prices remained to be updated by plants.

In general, although feedstock ACN prices drop significantly, acrylic fiber is still at a loss. Some downstream yarn plants are in consumption of reducing inventory for recouping capitals. Inventory of plants is stable and there is no great pressure shortly. Therefore, it is expected that acrylic fiber is in the state of fluctuating in a small range. Considering the continuous decline of ACN prices in Nov, the benefit of acrylic fiber is anticipated to improve at that time, and the space for acrylic fiber to drop is likely to expand.

[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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