Price trend

This week, the acrylic acid market broke out of its previous consolidation pattern, ushering in a substantial price increase. Unlike the "profit recovery-driven production resumption" in mid-February, the core driver of this round of price increases has shifted to a combination of rising costs and tight supply, effectively supported by downstream demand. The market logic has returned from "profit-driven" to "cost-push + supply-supported." As of February 25th, the benchmark price of acrylic acid from SunSirs was 6,283.33 RMB/ton, an increase of 2.01% compared to the beginning of the month (6,116.67 RMB/ton).

Market analysis

Cost side:

This week saw a key change on the cost side: the price of raw material propylene ended its previous stable trend and resumed its upward trend. On February 25, the benchmark price of propylene from SunSirs was 6,521.00 RMB/ton, an increase of 1.82% compared with the beginning of the month (6,404.33 RMB/ton).

The renewed pressure on costs has directly squeezed the profit margins of acrylic acid production, prompting manufacturers to raise prices to pass on the cost pressure. Manufacturers reacted swiftly. On February 24th, Shanghai Huayi New Materials raised its delivered price of acrylic acid in East China by 100 RMB/ton to 6,100 RMB/ton; on February 25th, the company raised it again by 100 RMB/ton to 6,200 RMB/ton. The cumulative increase within two days was 200 RMB/ton, a rise of 3.33%. Notably, the increase was even more significant in the South China market, with Satellite Chemicals' acrylic acid price in South China jumping from 6,300 RMB/ton to 6,700 RMB/ton, a single-day increase of 400 RMB/ton, reflecting a worsening of the regional supply shortage.

Supply side:

The supply side is characterized by "high existing capacity and absorption of new capacity." As of February 24, the average capacity utilization rate of the domestic acrylic acid industry remained at a high level of 85.94%, continuing a slight increase from the previous week. This operating level indicates that manufacturers have a strong willingness to resume production and the ability to take on current orders.

Regarding increased production capacity, BASF's 400,000-ton/year butyl acrylate unit at its Zhanjiang integrated base went into full operation in February. Market performance shows that this new capacity release did not suppress prices; instead, it was effectively absorbed by downstream demand, demonstrating the resilience of demand.

It is worth noting that this week's price increase was accompanied by transactions characterized by "real-money negotiations," indicating that sellers still maintained flexible negotiating power during the price increase process, and the market did not show any signs of overheating.

Demand side:

On the demand side, a healthy transmission pattern of "upstream price increases leading to downstream price increases" is emerging.

On the one hand, essential demand continues. Although downstream users remain cautious, the "decent transaction volume" indicates that essential demand has not shrunk due to price increases. On February 24, the price of acrylic acid in East China was 5,850 RMB/ton, up 50 RMB/ton from the previous period, demonstrating the market's ability to absorb demand.

On the other hand, downstream derivatives also saw price increases, providing support for upstream price hikes. On February 24, Shanghai Huayi New Materials raised its delivered price of ethyl acrylate in East China by 100 RMB/ton to 9,500 RMB/ton. The simultaneous increase in both volume and price of downstream derivatives indicates a smooth cost transmission chain, strengthening producers' willingness to purchase and creating a positive feedback loop for upstream acrylic acid.

Market outlook

In summary, this week's rise in acrylic acid prices is the result of a combination of rising costs, high supply levels, and strong demand. The core transmission path is as follows: the rebound in raw material propylene prices squeezed profit margins, prompting producers to raise their prices; the supply side maintained high operating rates, and new capacity was successfully absorbed; downstream derivatives followed suit, forming a positive transmission throughout the industry chain. Unlike the previous "profit recovery driving production resumption" model, this round of price increases has shifted to a "cost-push + supply-supported" logic. Future market trends depend on whether raw material propylene prices can continue to rise and the downstream demand capacity.

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