SunSirs: Spot Trading Was Sluggish, and the Vinyl Cyanide Market Was in a Stalemate

Price trend

Zhejiang Petrochemical's operating rate gradually increased last week, resulting in ample overall supply. While contract demand remained relatively stable, spot market activity was sluggish, local inventory pressures persisted, and the market remained stagnant. As of August 22, the mainstream negotiated price of vinyl cyanide for self-pickup at East China ports was 8,200-8,300 RMB/ton, the same as last week. In Shandong, the negotiated price of vinyl cyanide for short-haul delivery was around 8,050 to 8,150 RMB/ton, also unchanged from the previous week.

Analysis review

Ample Supply:

During the week, the operating rate of Zhejiang Petrochemical's 520,000-ton vinyl cyanide unit in East China gradually increased, and was expected to gradually return to around 95% last week. Daqing Petrochemical's 80,000-ton vinyl cyanide unit was shut down for approximately 24 days for maintenance on August 20. Overall capacity utilization had increased, and supply remained saturated, but spot demand remained insufficient, leading to rising inventories at some companies. According to statistics, as of August 21, the weekly capacity utilization rate of domestic vinyl cyanide plants was 73.26%, up 0.81% from the same period last week’s previous week. Weekly production was approximately 81,900 tons, an increase of 9,000 tons from the previous period. As of August 20, total inventory was approximately 46,000 tons, up 5,000 tons from the previous week.

Insufficient Demand:

Capacity utilization rates in major vinyl cyanide downstream industries fluctuated. ABS capacity utilization was 71.10%, unchanged from the previous week; acrylic fiber capacity utilization was 74.09%, down 2.79% from the previous week, due to maintenance at Daqing Petrochemical; and acrylamide capacity utilization was 53.54%, up 5.90% from the previous week, with plants in Anhui, Henan, and other regions resuming operations. Purchases of raw material vinyl cyanide remain insufficient, and spot trading sentiment remains subdued.

Cost Declined:

Upstream propylene prices fluctuated and declined during the period, leading to a decline in weekly vinyl cyanide production raw material costs. Meanwhile, vinyl cyanide prices remained stable, leading to a slight improvement in production losses last week. According to statistics, the average vinyl cyanide production cost last week was 8,808 RMB/ton, a decrease of 1.44% month-on-month. During the same period, the average profit margin for vinyl cyanide production was -558 RMB/ton, a month-on-month increase of 74 RMB/ton.

Market outlook

Overall, the supply was ample, the spot buying momentum continued to be insufficient and the cost was falling, and the fundamentals lacked effective positive driving force. However, as the month-end settlement approached, the overall quotations of suppliers remained unchanged, and the market deadlock was difficult to break. It is expected that the weakness will continue in the short term.

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