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Insight | Time: Jan 23 2019 2:57PM
How will acrylic fiber fare after the Spring Festival
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With the adjustment of acrylic fiber prices for Dec and Jan, market players began to prepare inventory before the Spring Festival. Those yarn plants that stayed on the sideline in earlier stage also started to gradually purchase raw materials. For satisfying downstream demand, acrylic fiber plants increased operating rate, and production of industrial chain normalized. With the Spring Festival holiday approaching, market players also looked forward to the post-holiday market trend.

For cost, the adjustment of ACN prices directly affected the cash flow of acrylic fiber. Currently, the profit of acrylic fiber was meager, though it was not at losses, risks still existed. In terms of the momentum for ACN prices to rise, firstly, propylene prices first increase and then fall back, while the profit margin is at 1,400yuan/mt based on the ACN prices of 11,800yuan/mt. Driven by cost, the momentum for ACN prices to tick up is not significant temporarily. Secondly, the recent trend of RMB is relatively strong on the whole. According to the author, some downstream plants decreased demand for domestic cargoes through import, forming resistance to ACN sales indirectly. Therefore, although inventories of plants are limited with moderate sales pressure at present, it is inappropriate to adjust up prices.

For demand, there are many variables in the market after the Spring Festival. Firstly, due to the relatively strong RMB, it is inevitable that there are some doubts about export orders after the Lunar New Year. Secondly, the mentality of some operators to touch the bottom may anticipate partial demand in later stage. However, according to the author, some yarn plants purchased raw materials as monthly plans at present, with intention to prepare inventory, but no satisfaction. Therefore, market players are likely to anticipate demand after the Spring Festival due to excessive control in downstream. On the one hand, it can guarantee the normal procurement after the Spring Festival. On the other hand, the possibility of price increase also cannot be ruled out.

Generally, although there are variables in demand after the Spring Festival, market players are still bullish about the market trend. In terms of cost, it is difficult for acrylic fiber cost to fall back due to operating rate of acrylic fiber, so acrylic fiber cost is anticipated to maintain stable. Under this background, if the traditional peak season of export sales in the first half of the year can be realized, acrylic fiber is estimated to be steady to ascending.

[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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