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Insight | Time: Nov 24 2022 2:04PM  Editor:Leslie
ACN price moves down further amid the increased market supply
 
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Since August, ACN price has been on an upward trend rarely seen during the year, which increased from the lowest 8,600yuan/mt in August to the highest 11,600yuan/mt in November, with a maximum increase of about 35%. However, by November, the decline gradually appeared. And the current price has basically retreated to the level before the end of October when ACN price was in a high position, and it is still moving downward.


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The main reason comes from the operation of plants. From August to early November, the operating rate of ACN plants was remained at about 70% due to the unit maintenance and production reductions of various plants. Besides, the inventory pressure was relieved by the export of nearly 57kt ACN from August to September. Since late November, considering the restart of Shandong Koruhr and Shandong Haili, as well as the slight increase in the operating rate of some manufacturers, market participants are worried about an increased sales pressure given the rise in supply. Therefore, prices of plants may be less converging and the fulfilling of sales targets through preferential prices will be the focus of the market. By end-November, PetroChina Jilin may restart its last production line, and factors such as the increase of Liaoning Bora's operation will pose continues pressure on sales.


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Viewed from the cash flow, there was a considerable profit in October to November this year, which was benefited from the concentrated efforts of unit maintenance and production reduction. However, the improvement in cash flow also stimulated the restart of some plants under the pursuit of profits, which would inevitably deteriorate the profitability of the industry again. At present, ACN still has a profit of about 700yuan/mt. In a competition perspective, the acceptable price declines vary among plants given the different feedstock costs. Therefore, by lowering the market price to strive for more market share, the production of plants with relatively high cost is also inhibited. In short, the current acrylonitrile market gradually enters a stage of competing costs. Plants with high costs are forced to cut production, while those with lower feedstock prices are able to maintain bulk-cheap trades.


[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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