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Insight | Time: Sep 23 2022 2:32PM  Editor:Leslie
ACN market caught in dilemma
 
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In September, ACN market prices finally embraced an upward trend, up from 9,100yuan/mt in the early of the month to 9,800yuan/mt on Sep 23. Such an increase, which may seem tiny in previous years, had become hard-to-find these days when the ACN is over supplied. However, after the gentle price rise last week, the top range of the traded price tended to be clear. According to traders, offers higher than 10,000yuan/mt are hard to be accepted, and there鈥檚 few room for further price rises despite the unsmooth delivery of good.

 

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View from the ACN plants, the price rise in Sep was largely owing to the production cut and shutdown for maintenance of various ACN units, such as the alternative operation of PetroChina Jilin鈥檚 ACN unit, the production cut of Shanghai Secco and Jiangsu Sierbang, and the delayed restart of Tianchen Qixiang and Shandong Koruhr. As a result, the operating rate was at around 70%. By now, the average annual operating rate was only 80% compared to the 88% last year. Per unit profit and the operating rate of ACN plants were negatively correlated so far.



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As for the costs, propylene prices also saw rebounded signs in September. This, coupled with increased liquid ammonia costs due to agricultural demand rise, had caused amounted cost pressure for ACN. Take the current propylene offers of 7,400yuan/mt in Shandong as an example, then the theoretical cost of ACN is around 9,700yuan/mt. As such, the current ACN market prices which prevail at 9,700-9,900yuan/mt offer little profit room for plants, thus the prices are less likely to drop in short term.

 

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From the perspective of demand, the operating rate of ABS had increased from 72% at the beginning of the month to 80% by now. However, the demand from acrylic fibers had been significantly reduced due to the maintenance among large plants, the operating rate of which dropped to below 40%. As a result, the positive influences brought by the ACN plant maintenance was offset. In addition, part of demand for National Day holiday is pulled forward in September. After the National Day holiday, due to the short sales period, it is not ruled out that market players might provide discounts for sale so as to complete the established sales target. Therefore, the likelihood of a price reduction may increase at that time.


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To sum up, the current firmness of the market has advanced the demand in October to a certain extent. However, given the stable operating rate so far, the ACN supply circulated on the market have been effectively controlled, enabling manufacturers to take the initiative in market quotations while traders have to follow passively. Considering the increased supply in the future market (the restart of ACN units of Tianchen Qixiang and PetroChina Jilin and the start of Liaoning Bora鈥檚 ACN unit), the plants inventory will be a key variable at that time. If properly controlled, the price fluctuation will be relatively limited. Otherwise, the market prices will be diverged, causing greater possibility of market volatility.

 


[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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