Price trend

Last week, the market news was quiet, and the fundamentals remained weak, with localized inventory pressure. However, there was no expectation of a decrease in supply in the short term, and demand remained sluggish. Major vinyl cyanide suppliers continuously lowered their prices, leading to a wider market decline. As of January 9th, the mainstream ex-tank price at East China ports was 7,250 RMB/ton, a decrease of 200 RMB/ton compared to the previous week; the price in the Shandong market for short-distance delivery was 7,200 RMB/ton, a decrease of 200 RMB/ton compared to the week before last.

Analysis and Commentarys

Ample supply:

During this period, there were no significant fluctuations in plant operations. Major manufacturers in East China maintained high operating rates, with Zhejiang Petrochemical's 520,000-ton vinyl cyanide plant temporarily operating at around 85% capacity; Shandong Haijiang's 130,000-ton vinyl cyanide plant was temporarily shut down for maintenance. The overall industry capacity utilization rate remained at around 80%, and there were no significant changes in the supply and demand fundamentals. According to statistics, as of January 8th, the weekly capacity utilization rate of domestic vinyl cyanide factories reached 78.82%, an increase of 0.49% compared to the previous period; weekly production was approximately 89,800 tons, an increase of 500 tons compared to the previous period. Total inventory was approximately 63,500 tons, an increase of 2,500 tons compared to the previous week, indicating continued localized inventory accumulation and increased inventory pressure.

Demand was moderate:

Last week, capacity utilization rates in major downstream industries showed mixed trends. ABS capacity utilization was 69.8%, a decrease of 0.1% compared to the previous week; acrylic fiber production resumed after a brief maintenance period at Hangzhou Bay, and Jilin Chemical Fiber's Huazhong plant restarted, bringing the acrylic fiber industry's capacity utilization to 57.58%, an increase of 10.47% from the previous week; and acrylamide capacity utilization was 54.19%, a decrease of 0.65% compared to the previous week. Overall, demand increased slightly, but the increase was not significant, resulting in generally flat demand.

Cost rose

During the week, upstream propylene prices continued to rise, leading to increased costs, while vinyl cyanide prices fell more sharply. Therefore, production losses worsened significantly last week. According to statistics, as of January 8th, the price of propylene in the Shandong market was 5,840 RMB/ton, an increase of 110 RMB/ton compared to 5,730 RMB/ton at the end of last week. The average production cost of vinyl cyanide was 8,234 RMB/ton, a 0.88% increase compared to the previous week. During the same period, the average production profit of vinyl cyanide was -904 RMB/ton, a decrease of 373 RMB/ton compared to the previous week.

Market Outlook 

As of January 9, the domestic vinyl cyanide market was undergoing a weak consolidation. After a continuous decline, some buying interest had emerged, and increasing losses had slowed the market's downward trend. However, the fundamentals remained weak, and demand remained flat.  Nevertheless, fluctuations in supply are expected in the near future, limiting further downward potential in the market.

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