Price trend

Since the beginning of September, domestic vinyl cyanide prices have fluctuated upward. As of September 5th, the mainstream ex-tank price at East China ports rose from 8,200-8,300 RMB/ton to around 8,450-8,550 RMB/ton, a 250 RMB/ton increase. In Shandong, short-haul delivery prices rose from 8,050-8,150 RMB/ton to 8,300-8,400 RMB/ton, a 250 RMB/ton increase. The spot ex-factory price in Shandong, represented by Lihuayi, also increased from 8,000 RMB/ton to 8,250 RMB/ton, a 3.13% increase.

Analysis review

Supply shrinking

The direct factor for this round of increase still comes from the supply side. There was an unplanned reduction in production in the East China region. Zhejiang Petrochemical reduced its load due to a fault at the end of August, and planned to overhaul a set of equipment for about 10 days in mid-September; at the same time, Sinochem Quanzhou started to shut down a line in early August, and may stop all of it in mid-September; Shanghai Secco maintained one set of equipment in operation; Sailboat Petrochemical maintained 2-3 sets of equipment in operation, and currently the operation rate is about 70%; in addition, Northern Tianchen Qixiang and Fushun Petrochemical continue to overhaul.

According to statistics, as of September 4th, the weekly capacity utilization rate of domestic vinyl cyanide plants fell to 72.85%, down 1.12% from the same period last week. Weekly production was approximately 81,500 tons, a decrease of 1,200 tons from the previous week. Total inventory was approximately 42,800 tons, down 1,200 tons from the previous week. Low inventory levels coupled with shrinking supply present opportunities for propylene prices to rise.

Demand is robust:

The overall demand side of the market remained relatively stable in September. While acrylic and ABS production saw a temporary decline, other sectors, such as acrylamide, showed improvement, supported by expectations of stockpiling ahead of the traditional peak season and long holidays. As of September 5th, ABS capacity utilization was 69.0%, down 1.8% from the previous week, due to plant reductions or shutdowns in northern China. Acrylic fiber capacity utilization was 60.66%, down nearly 15% from the previous week, with Daqing Petrochemical undergoing maintenance and Jimeng Acrylic Fiber reducing its capacity. Acrylamide capacity utilization was 54.97%, up 1.36% from the previous week, with plants in Shandong and Henan increasing capacity or restarting.

Cost support:

The recent high price of upstream propylene has further increased vinyl cyanide production costs, which has also contributed to the market's upward trend. According to statistics, the average production cost of vinyl cyanide this week is 9,006 RMB/ton, a month-on-month increase of 1.35%. During the same period, the average profit margin for vinyl cyanide production is -685 RMB/ton, a month-on-month decrease of -49 RMB/ton.

Market outlook

The vinyl cyanide market is expected to fluctuate in the first half of September amidst a favorable environment characterized by high costs, low inventory, and shrinking supply. However, these factors are limited and subject to uncertainty. Coupled with insufficient long-term demand, the improvement in the market supply-demand relationship remains uncertain. In the second half of the month, maintenance facilities in northern China will gradually resume, while stocking up before the National Day holiday will also begin. This mixed news outlook may lead to a renewed market stalemate.

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