In recent weeks, acrylonitrile market has witnessed a long-term stability of its price, which resembles the acrylic fiber market, bewildering market players who have experienced the high winds and waves of earlier years. Even the unexpected shut down of Shandong Koruhr's 260kt ACN unit fails to make a stir on the market, which seems to stand still in all circumstances.

From the index point of view, since the end of February, the price of acrylonitrile industry as a whole has only inched up by 50yuan/mt despite that offers of plants have experienced both rise and fall during this period. Notwithstanding, overall trading price is modestly affected, and plants mostly offer higher than market participants.

Figure. Weekly offer of ACN plants (based on the price at the beginning of the week)

Weekly offer
Plants	Feb 27- Mar 3	Mar 6-10	Mar 13-15
Shanghai Secco	10900	11100	11000
Sinopec East	11000	11200	11200
Sinopec North	11000	11200	11200
PetroChina Jilin	11000	11000	11200
Lihuayi	10500	10500	10500
Jiangsu Sierbang	11000	11000	11200

The main problem remains the contradiction between the increasing supply and the insufficient downstream demand in the short term. With regard to production capacity, the overall capacity of domestic acrylonitrile has risen to 4.139 million tons since February including the 200kt unit of CNOOC Hainan and the 130kt unit of Jieyang Jihua North Chemical. The average operating rate of ACN plants in the first half of March was about 65%, and the theoretical output was about 112,000 tons. While the total consumption of downstream ABS, acrylic fiber and acrylamide plants was about 94,300 tons. Therefore, oversupply still exists, depressing the upward trend of acrylonitrile market. Since demand is hard to see significant improvement in the short run, broaden sources of sales and reduce expenditure by cutting production remain the major resorts in order to reverse the situation.

 

As for raw materials, propylene prices in Shandong often see large price fluctuations in March to April, and mostly show an upward trend. Considering this, there’s little likelihood of ACN plants to wait passively for a weaker feedstock price in the future market.

Judging from cash flow, the profit of ACN industry is currently near the cost line, thus plants are more sensitive to raw materials prices at the current stage. As such, if there is a large increase in the propylene price in the future, ACN plants may step up production reduction in order to support the price. But this could also turn out to be an act of "sewing trousseau" for their components. So how should plants arrange operation reasonably is a question that needs to be considered by all market players in the acrylic industry. After all, from acrylonitrile plants to ABS plants, which have the greatest demand, are all facing oversupply.