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Insight | Time: Nov 20 2019 2:33PM
Brief analysis on acrylic fiber market trend
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There has been a question about the time of plants to adjust down prices and the proper timing of procurement with the preparing inventory market before the Spring Festival approaching. The author briefly analyzed based on fundamentals.

First of all, take Shanghai PetroChemical as an instance, its inventory was at around 1kt, with operating rate at around 90%.The production and sales was balanced. Ningbo Zhongxin, Hangzhou Bay Acrylic and Jilin Chemical Fiber also ran steady with relatively low inventory. Thus, plants were under moderate pressure currently.

In terms of cash flow, it can be seen that acrylic fiber was profitable. However, the profit was limited temporarily. CCF theoretical cash flow was at around 550yuan/mt.

In the case of cost, although ACN market was weak to stable, it was in a state of equilibrium amid maintenance of Sinopec Anqing. In the second half of December, the monthly supply may rise by 17.5kt after the restart of Sinopec Anqing. Under the backgrounds of no big change in demand, market players were pessimistic about the market trend, so the probability of price to decrease may be larger. Thus, cost is expected to continue to drop in December.

In the case of mentality of yarn plants, partial yarn products rebounded, while inventory of yarn plants fell back, but it was still in the process of inventory reduction. Bosses of several yarn plants expressed that it was enough to cut inventory this year. Therefore, yarn plants hope that the destocking time can be extended through stabilizing prices, while the extension of price adjustment period definitely restricts end-users placing orders and is advantageous for inventory curtailment of yarn plants.

Generally, it is inappropriate adjust down acrylic fiber prices. As cargoes are purchased for rigid demand in traditional peak season this year, yarn plants are under pressures from capital and inventory, so the decision of plants is estimated to be gradually closer to the specific situation of downstream yarn market. The probability of stabilizing prices is anticipated to be larger in short term.
[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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