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Insight | Time: Dec 27 2019 3:58PM
How will ACN market fare in the future?
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ACN is gradually weak to stable after the sharp increase, while market players are pessimistic about the market trend with the restart of Sinopec Anqing and PetroChina Jilin’s third ACN unit approaching. At present, offers were largely at 11,200-11,300yuan/mt, and the space for settlement price to move down may not be large.

From the view of downstream, acrylic fiber is under the greatest cost pressure at present. Cash flow of acrylic fiber plants may be still at a loss, and it is inappropriate to pull up price again after its price decrease in December, so it is resistant to high-price raw materials. From the standpoint of benefit loss, the downward pressure on acrylic staple fiber will not be eased unless ACN price drops to around 10,500yuan/mt. However, partial plants dumped raw materials with the price of 10,500yuan/mt before, so the intention of adjusting down raw material prices was shown.

From the perspective of ACN, the ups and downs in December is mainly because the restart of overhauled units is postponed and cargoes haven’t arrived at the port, leading to a supply vacuum. Ignoring the impacts of Sinopec Anqing’s maintenance, CCF price index may be at around 10,800yuan/mt in line with the price at the end of October.

In the sight of supply and demand, except for Sinopec Shanghai recovering to run at 90%, other units continuously may run stably. In addition, Sinopec Anqing and PetroChina Jilin’s No.3 ACN unit is likely to restart, then industry operating rate ascends to around 95%, which is higher than 84% of the end of October. Under the background of rising supply and steady demand, the price index of 10,800yuan/mt is expected to consistently move down.

In terms of cost, Shandong propylene price is lower than that at the end of October currently, which is at around 6,675yuan/mt, with a fall of around 500yuan/mt compared with the end of October. ACN theoretical cost is at around 9,300yuan/mt, while the profit is at around 2,000yuan/mt, which means that the space for price to decline may be larger if ACN loses supply support.

Generally, market has been affected by the bearish factors brought by the restart of Sinopec Anqing, and the price descends. Declines need to be considered from many aspects, but market players are inclined to be active in dumping goods under the background of poor market. However, the lowest price is likely to be the one the price eventually falls to. Certainly, these considerations include some uncertainties such as the acrylic fiber inventory preparing in January before the Spring Festival, and whether the run rate will rise should also be paid attention.
[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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