Price trend

Despite stable contract demand within the month, weak spot buying kept the vinyl cyanide market low in July. In East China, vinyl cyanide prices fell from 8,200 RMB/ton at the beginning of the month to 8,150 RMB/ton at the end of the month. In Shandong, short-haul delivery prices fell from 8,100 RMB/ton at the beginning of the month to 7,950 RMB/ton at the end of the month.

Supply was saturated, supply and demand were out of balance

Supply: Domestic vinyl cyanide plant capacity utilization increased. According to statistics, China's vinyl cyanide production reached 366,800 tons in July, a month-on-month increase of 12.14%. Capacity utilization for the month was 75.94%, a month-on-month increase of 5.97% and a year-on-year decrease of 5.86%.

During the month, Liaoning Jinfa Technology's 260,000-ton vinyl cyanide unit restarted at the end of July, postponed from the original end of June. Meanwhile, the company was sourcing vinyl cyanide from outside the region for ABS production. Shandong Haijiang's 130,000-ton vinyl cyanide unit temporarily shut down for approximately 10 days for maintenance. Yulong Petrochemical's vinyl cyanide supply in July was primarily for contract and self-use, with no spot sales. Declining spot resources in Shandong and a temporary reduction in supply had mitigated the decline in spot prices in the Shandong market.

While Kingfa Technology's cross-regional sourcing had partially alleviated oversupply pressure in East China and, to a certain extent, the market's oversupply, Zhenhai Refining and Chemical's new 400,000-ton unit began operations in June, with further capacity expansion and utilization increasing to 90% in July. This increased capacity base had strengthened overall supply, but the market still remained oversupplied, putting downward pressure on prices.

In addition, due to the poor profitability of vinyl cyanide and its by-products, the production loss situation continued. At the end of the month, the operating load of Zhenhai Refining and Chemical's 400,000-ton vinyl cyanide unit dropped to around 80%. Spot resources in the East China region were temporarily limited, and suppliers' quotations had risen slightly.

On the demand side: Downstream demand was generally in the off-season. While ABS production increased in July, its impact on vinyl cyanide demand was limited. The acrylamide industry's operating capacity is likely to continue to decline, and downstream companies are generally procuring raw materials on demand. This weakened demand was suppressing vinyl cyanide prices. Due to expectations of increased supply and weak demand, market participants were generally pessimistic, with many adopting a wait-and-see approach and cautious purchasing, further exacerbating the market's decline.

Future outlook:

Jilin Petrochemical's new facility is expected to start up in early August, and Liaoning Jinfa's previously overhauled facilities have gradually restarted, leading to continued supply increases in the industry. However, downstream, the supply-demand imbalance has not fundamentally improved, and upward price momentum lacks sustained momentum, with demand support remaining relatively modest. On the cost side, the price of raw material propylene is temporarily relatively low, and a temporary rebound is expected. Cost pressures are rising again, but the potential for further increases is limited. As a result, the vinyl cyanide market is expected to remain volatile at a low level.

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