China ACN: bullish factors dominate the market gradually

Since July, bears and bulls coexist on Chinese ACN market, and this week, the bulls dominate the market gradually.

For bullish factors, producers offer at firm rates successively with no inventory pressure, strangling part of sellers’ intention to sell with discounts. On one hand, the price spread between domestic ACN and foreign ACN maintains. The foreign ACN prices maintain high at around $2,015/mt, equivalent to above 15,000yuan/mt. And the domestic ACN is mostly flat at 14,600yuan/mt, so the export opportunities continue. On the other hand, PetroChina Jilin’s two production lines of ACN have restarted in early period of this week, while Jiangsu Sailboat’s one 130kta ACN line is closed at the weekend for one week of maintenance. In addition, Zhejiang Petrochemical’s new unit has not started up in short. The total supply is hard to rise obviously. With low inventory, producers offer at firm rates.

For bearish factors, the operating rate of AM plants is below 60%, as it is hard to ramp up caused by hot weather. The operating rate is expected to keep low. For acrylic fiber market, the cost pressure continues, and profits are limited. It is expected that plants will continue to maintain production cut. Nevertheless, Hangzhou Bay Acrylic’s unit has restarted, and demand recovers partially. The operating rate of acrylic fiber recovers to about 55%.

Viewed from current situation, the higher ACN prices this week are mainly caused by the tight supply, favorable market mindset stimulated by the unit maintenance and the expectations of higher settlement prices. Moreover, acrylic fiber plant inventory is under control. However, the maintenance time for Jiangsu Sailboat’s unit is not long, and PetroChina Jilin’s another two lines plan to restart next week. Then supply will recover gradually, and the regional shipments will arrive around mid-Jul. The supply tightness will ease gradually.