Price trend:

Last week, the news flow was quiet, and there was no significant change in fundamentals. Industry capacity utilization remained above 80%, but oversupply led to increased inventory, resulting in a volatile downward trend in the market. As of December 5th, the mainstream ex-tank price at East China ports was 7,975 RMB/ton, a decrease of 150 RMB/ton compared to the previous week; the short-haul delivery price in the Shandong market was 7,900 RMB/ton, a decrease of 25 RMB/ton compared to the previous week.

Market Analysis

Oversupply:

During the period, there were no fluctuations in plant operations, supply remained saturated while demand weakened in some areas, leading to increased inventories for some companies. According to statistics, as of December 4th, the weekly capacity utilization rate of domestic vinyl cyanide factories reached 80.6%, unchanged from the previous period; weekly production was approximately 91,800 tons, also unchanged from the previous period. Total inventory was approximately 55,500 tons, an increase of 2,000 tons compared to the previous week, indicating increased inventories for some companies.

Weakening demand:

Last week, capacity utilization rates in major downstream industries showed mixed trends. ABS capacity utilization decreased to 68.3%, down 2.9% from the previous week, with a capacity base of 11.09 million tons/year; acrylic fiber companies maintained a capacity utilization rate of 76.53%, unchanged from the previous week, but Jilin Chemical Fiber's Hebei Jiga Acrylic Fiber plant was scheduled for a shutdown of maintenance for 8-10 days in mid-to-late December; acrylamide capacity utilization was 55.87%, up 0.66% from the previous week. Overall, demand weakened.

Rising costs:

Last week, upstream propylene and ammonia prices rose, leading to continued increases in the cost of raw materials for vinyl cyanide production, resulting in continued losses for vinyl cyanide producers last week. According to statistics, as of December 4th, the price of propylene in Shandong was 6,050 RMB/ton, an increase of 25 RMB/ton compared to 6,025 RMB/ton at the end of last week. The average production cost of vinyl cyanide was 8,557 RMB/ton, a 0.60% increase compared to the previous week. During the same period, the average production profit of vinyl cyanide was -512 RMB/ton, a decrease of 131 RMB/ton compared to the previous week.

Market Forecast:

As of December 5, the domestic vinyl cyanide market was experiencing a continued surplus in supply.  There are no plans for production cuts or plant maintenance in the short term, and downstream users have ample inventory and are not actively purchasing. Trading in the spot market is sluggish, and further price declines are expected in the short term. However, persistent cost pressures continue to limit the downward potential of the market.

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