The new capacity of the industry was large, and the supply side of vinyl cyanide continued to be under pressure
Since the second half of 2021, the vinyl cyanide capacity has entered the capacity expansion cycle. Under the pressure of supply side, the price of vinyl cyanide in 2022 was lower than that in 2021 as a whole.
According to SunSirs, 650,000 tons of new capacity has been added in the second half of 2021 alone; In the first half of 2022, a total of 390,000 tons/year of new vinyl cyanide units will be put into production by Tianchen Qixiang and Lihuayi; In the fourth quarter of 2022, Liaoning Jinfa's 260,000 t/a vinyl cyanide new unit will be put into production; A total of 10,000 t/a vinyl cyanide units are planned to be put into operation in the future. The production capacity of vinyl cyanide has risen straightly. If the enterprise does not take measures such as load reduction and maintenance, the pressure on the supply side of vinyl cyanide will be huge.
The operating rate in the downstream peak season increased, and the demand support obviously for vinyl cyanide.
The main downstream consumption industries of vinyl cyanide are ABS, acrylic fiber industry and acrylamide (including polyacrylamide).
In the first quarter of 2022, the operating rate of ABS industry was 90% or even full load, and the demand had significant support for vinyl cyanide. Later, at the end of March and the end of June, there were two centralized maintenance periods, and the commencement was as low as 70% and 60% respectively, which was insufficient to support vinyl cyanide; since the beginning of August, ABS started to operate at a high level to nearly full load, and the demand had support again for vinyl cyanide. According to SunSirs, a total of 1.05 million tons/year of new production capacity of ABS, such as Lihuayi, Zhejiang Petrochemical, Ningbo Taihua, is planned to be put into production, which may form a certain support for vinyl cyanide in the later period. According to the monitoring of SunSirs, as of November 21, the domestic ABS price was 12,050 RMB/toon, down 18.86% from 14,850 RMB/toon at the beginning of the year. The highest point in the year was 15,250 RMB/toon on April 6, and the lowest point in the year was 11,700 RMB/toon at the end of August, with an amplitude of 23.28%.
Acrylic fiber terminal products are mainly sweaters, blankets, carpets, etc., while the peak demand season for sweaters, blankets, etc. is concentrated in cold winter. In the first quarter of 2022, the operating rate of domestic acrylic fiber was around 60%. The operating rate in April was below 40%. The output in the first quarter was about 133,674 tons, a year-on-year decrease of 5.71%. In the second quarter and the beginning of the third quarter, the industry started at a low level in the off-season. After September, the vinyl cyanide unit of Jilin Chemical Fiber, a major domestic acrylic fiber factory, was restarted to normal operation, and the domestic acrylic fiber construction started from 30% to more than 60%. Later, with the increase of demand in the peak season, the construction started for more than 70%, and the demand for vinyl cyanide increased significantly.
In recent years, the acrylamide/polyacrylamide industry has greatly increased, and the proportion of vinyl cyanide application has gradually increased. According to SunSirs, the market size of acrylamide in China in 2017 was 4.35 billion yuan; In 2021, the market scale of acrylamide in China was 7.42 billion yuan, with a year-on-year growth of 11.2%. In 2017, China's polyacrylamide production was about 750,000 tons, and in 2021, China's polyacrylamide production was about 1.26 million tons. In 2022, the operating rate of polyacrylamide industry was basically between 50% and 70%. There was a certain rigid support for vinyl cyanide. According to the monitoring of SunSirs, as of November 21, the price of domestic polyacrylamide was 15,514 RMB/toon, down 10.54% from the price of 17,342 RMB/toon at the beginning of the year, and the overall fluctuation in 2022 was relatively small.
The price of raw propylene fluctuated widely, with obvious early support.
According to the monitoring of SunSirs, as of November 21, the domestic propylene price was 7,306 RMB/toon, down 3.21% from the price of 7,548 RMB/toon at the beginning of the year. The highest point in the year was 9,314 RMB/toon on March 8, and the lowest point in the year was 6,834 RMB/toon on August 24, with an amplitude of 26.62%. In the first half of the year, the propylene price was at a high level from January to May. Especially in March, because the situation in Ukraine was still tense, the market became more worried about the risk of supply interruption. As the international oil price continued to rise significantly, the propylene price increased, reaching 9,314 RMB/toon, with obvious cost support. In the second half of the year, as new units were put into operation and overhaul units resumed production, the supply of propylene increased, market competition intensified, and the crude oil was weak, the price of propylene fell all the way. During the "golden September and silver October" period, propylene rebounded slightly, but it was still weak overall. In the second half of the year, the cost support for vinyl cyanide was obviously insufficient.
Market outlook
Vinyl cyanide analysts from SunSirs believe that after a year of concentrated capacity expansion, vinyl cyanide is currently in a state of overcapacity; If the new capacity of ABS can be put into production on time in the later period, the demand will have support for vinyl cyanide. If the new capacity is delayed, the supply of vinyl cyanide will still exceed the demand in the short term. Recently, the US dollar has continued to maintain its strength. There is a risk that international oil prices will continue to fall. Propylene prices may decline, and cost support for vinyl cyanide will continue to weaken. At present, vinyl cyanide has declined slightly since the middle of November. To sum up the influencing factors, it is expected that the rebound of vinyl cyanide may not be sustainable in the short term. In the long run, vinyl cyanide will still be consolidated to seek a new balance point between supply and demand.
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