This week, the domestic acrylic acid market saw a significant drop in prices due to multiple negative factors. Affected by the continued weakness of demand in the traditional off-season, the market situation took a sharp turn for the worse, and prices continued to fall. According to the monitoring data of SunSirs, as of July 22, the base price of acrylic acid was 7,100.00 RMB/ton, down 0.93% from 7,166.67 RMB/ton at the beginning of this month.
The core pressure of this round of market weakness mainly comes from the increase in supply expectations and the change in market sentiment. Specifically, the production enterprises that were shut down in the early stage are gradually resuming work, and the supply increase expectations in Shandong have gradually become a reality; at the same time, the subsequent new supply in South China will also be released soon. These factors have jointly exacerbated the market's concerns about oversupply, resulting in a significantly bearish overall market mentality.
The operating rate of the acrylic acid industry has recently shown structural fluctuations. The main reason is that the Shandong region's equipment maintained high-load operation, which promoted the increase of the national comprehensive load average; while the East China region was affected by the power failure of the Satellite Chemical Pinghu Base (acrylic acid production capacity of 680,000 tons/year), the equipment was unexpectedly shut down and recovered slowly, resulting in a significant decrease in regional load. Under the background of the coexistence of equipment start-ups and shutdowns in many places, the industry's comprehensive operating rate still recorded a slight increase.
The supply increase, especially the release of new production capacity in Shandong and the slowdown in downstream consumption, formed a scissors gap, the pressure of supply and demand imbalance intensified, and the market bearish sentiment spread. It is worth noting that the failure of the oxidation unit simultaneously equipped with the Satellite Chemical Pinghu Base accidentally caused a spot supply gap in the region, partially buffering the decline; the spot price in East China slowed down, the company's auction transaction rebounded slightly, and the acid price temporarily stabilized in the range of 6,800-7,000 RMB/ton; the failure in East China was a force majeure disturbance, and Shandong/South China had a certain expectation of increased production, such as a new 300,000-ton unit in South China was about to be put into production, which continued to suppress the market, and the medium- and long-term weak market situation was difficult to change.
The price of acrylic acid fell significantly, resulting in a significant narrowing of the industry's profit margin, and all previous gains were spit out. This round of decline has also been transmitted to the downstream, and the profit of the mainstream product butyl acrylate has shrunk simultaneously. The root cause is the decline in the price of raw material acrylic acid and the weak trend of another raw material n-butanol.
The market is expected to show a wide range of fluctuations in the future. The driving factors are: the short-term suspension of East China on the supply side has eased the positive effects, the resumption of production in South China has brought incremental growth, the downstream purchasing willingness and rhythm on the demand side, and the market sentiment and trading mentality. The current supply side is negative. The recovery of East China and the incremental growth in South China may aggravate the bearish sentiment in the market, and the risk of price downturn still exists. In the future, we need to pay close attention to the factory price guidance and the actual purchasing trends of the downstream.
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