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Insight | Time: Jan 14 2020 2:40PM
How will acrylic fiber market fare amid eased cash flow pressure?
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Since January 2020, acrylic fiber cash flow has continuously affected by the cost pressure. In addition, considering the factor of yarn mills taking a holiday during the Spring Festival, it may be difficult to have space for acrylic fiber price to be adjusted. However, end-users hold the optimistic attitude for the acrylic fiber price after the Spring Festival. Whether the price can be adjusted up as expected depends on the specific situation of supply and demand.

Firstly, for cost, the production enthusiasm of acrylic fiber has consistently suppressed by cost pressure. At present, from the perspective of ACN, price is in a downward tendency, but the low inventory still plays an important role in supporting ACN price. Market players expect that the settlement price may not be low under the background of low inventory, so it is likely to be difficult for market trading price to constantly slip. Therefore, it may not be easy for ACN industry to plunge. Nevertheless, with some downstream ACN plants shutting down for taking a holiday during the Spring Festival, overhauled production line of Sailboat and the increased supply brought by restarted Sinopec Anqing, the inventory is expected to be cumulated, while the supportive factor of raising ACN price is anticipated to be weakened.

In the sight of acrylic fiber, though the weakened support of ACN is favorable for improving acrylic fiber cash flow, sales issues also need to be considered. Hence, acrylic fiber operation rate is estimated to be adjusted flexibly based on order acceptance and sales statue. Compared with the weak demand during the Spring Festival, the start of yarn market after the festival is also anticipated to improve sales, but it still depends on order acceptance.

From the standpoint of yarn market, the run rate will recover after the festival, but it remains to be seen whether the order status can support acrylic fiber plants to ascend operating rate. However, from a macro perspective, compared with the situation in the same period of 2019, though the acrylic fiber is not included in the tariff cut list in the first phase of agreement reached by the Sino-US trade war, it is still likely to stimulate market demand as a bullish factor.

To sum up, the cost support may be weakened. But on the demand side, there is a macro positive factor that is transferred from end-users to acrylic fiber step by step, but it still needs to consider the restart time of downstream yarn mills. Meanwhile, if plants need to improve cash flow, it is necessary to control the operating rate for adjusting the demand for ACN.
[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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