SunSirs: Vinyl Cyanide Market Falls Again due to Insufficient Spot Buying Momentum

Price trend

Despite a decline in industry capacity utilization this week, overall supply remains ample. Furthermore, with the launch of new capacity at Jilin Petrochemical, spot demand remains weak, and local inventory pressure persists. The market's weakness persists, with prices falling again. As of August 15th, the mainstream negotiated price for self-delivery of canned goods from East China ports is between 8,200 and 8,300 RMB/ton, down 100 RMB/ton from the previous week. Short-haul delivery prices in Shandong are around 8,050 to 8,150 RMB/ton, down 100 RMB/ton from the previous week.

Analysis review

Capacity utilization has declined, but overall supply remains saturated:

During the week, Fushun Petrochemical's 92,000-ton vinyl cyanide unit in the northern market was shut down for 45 days of maintenance starting from August 10, but Jilin Petrochemical's new 260,000-ton/year unit started production on one line on August 12. The domestic total vinyl cyanide production capacity base was adjusted to 5.449 million tons/year, and the industry's overall capacity utilization rate declined.

However, weekly production has changed little, and overall supply remains saturated. Spot demand is insufficient, leading to rising inventories at some companies. According to statistics, as of August 14th, the weekly capacity utilization rate of domestic vinyl cyanide plants was 72.45%, down 1.89% from the same period last week. Weekly production is approximately 81,000 tons, a decrease of 1,000 tons from the previous week. Total inventory was approximately 45,500 tons, up 1,000 tons from the previous week.

Downstream buying momentum remains weak:

Capacity utilization rates in major downstream industries of vinyl cyanide decline. ABS capacity utilization is 71.10%, unchanged from the previous week; acrylic fiber capacity utilization is 76.88%, down 0.46% from the previous week; and acrylamide capacity utilization is 47.64%, down 0.35% from the previous week. Overall, operating rates at small and medium-sized downstream companies declined, and procurement of raw material vinyl cyanide remained insufficient, resulting in subdued spot trading activity in the market.

Propylene prices rise significantly:

During the period, upstream propylene prices rise significantly, leading to an increase in weekly vinyl cyanide production raw material costs. Meanwhile, vinyl cyanide prices fall again, exacerbating production losses this week. According to statistics, the average vinyl cyanide production cost this week is 8,937 RMB/ton, a 2.87% increase from the previous month. During the same period, the average vinyl cyanide production profit is -632 RMB/ton, a -214 RMB/ton increase from the previous month.

Market outlook

Overall, although cost support has increased, Jilin Petrochemical's new 260,000 tons/year unit has been put into production one after another, and new production capacity has been released. The overall supply is still abundant, but spot buying continues to be insufficient, and local inventory pressure exists. Under the supply, demand and cost game, the market amplitude will be narrow and the weakness will continue in the short term.

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