ACN Continues to Firm High in the Short Run

During Oct-Nov, domestic ACN supply was short on a whole. Market prices climbed continuously on good demand and bullish market environment. In late Nov, although other chemical fiber products mostly dropped, ACN still kept inching up. However, in Dec, ACN showed signs of weakening. Besides, some ship cargoes are expected to arrive later. So, will the market continue to firm high or weaken after 2-month firming? We analyze the market from several points below.

1. Domestic plants maintained high operating rates and low inventory 

China ACN plants mostly completed turnarounds and resumed production in early Nov. Currently the overall running rates in ACN market stayed around 86%. Sinopec ran at full capacity, Jilin PC at 60%, Fushun PC at 95%; Daqing PC, Daqing Refining and Chemical Company, Lanzhou PC and Shanghai PC ran at 90% or above. Despite of high running rates, producers have low inventories.

Of all the plants, only Sinopec, Jilin PC and Fushun PC provide supply to spot market (others provide ACN to their own fiber plants). Recently, spot supply of Jilin PC and Fushun PC was quite limited, at around 400 tons/day. The spot supply of Sinopec was also small as its fiber plants were running at high rates.

2. Spot availabilities are scarce at the port while many upcoming shipments are expected
Recently, spot cargoes kept tight at the ports. Traders generally have no spot materials in hand while distributors have a few cargoes. However, a large amount of ship cargoes are expected to arrive later. It was estimated that around 25,000 tons of cargoes will arrive in Dec and the number will be above 10,000 in Jan. Dec deliveries have almost been sold out and major traders were mostly selling Jan-Feb materials. Therefore, when ship cargoes arrive at the port later, only a limited amount will enter spot market, thus the impact will be small.

3. Oversea ACN prices stayed firm, unlikely to drop in the short run
The supply in oversea market remained tight, with prices firm at $2280/mt CFR FE Asia. Recently, oversea market softened slightly, but as some units were under turnaround, prices may keep consolidating at a high level, providing support to domestic market.

4. Downstream kept good operation, demands stable
Although transactions in acrylic fiber and ABS markets were weaker than before, producers still kept high running rates (mostly at 80-90%). As inventory was low, plants were not inclined to reduce running rates, thus demand for ACN will be maintained. AM market was weak with running rates at 60-70%, but situation was not worsening and demand kept stable.

In conclusion, China ACN market will continue to firm high despite some bearish factors. Prices are unlikely to fall in the short term.

$1=CNY6.66