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Acetic acid drops due to excessive supply

2021-11-03 08:11:54 CCFGroup

Prices of chemicals based on coal are declining, track the slump in coal price recently. China acetic acid prices keep sliding as well in Oct, under pressure from excessive supply.

China acetic acid plant operating rate rebounded in the beginning of Oct with plants restarting and has been hovering high since then. Due to the power rationing measure in Sep, several plants were shut in Jiangsu and Shandong Province. Then, Jiangsu Sopo’s 400kt/yr plant was restarted on Oct 6, Shandong Yankuang’s 1 million mt/yr plant in end-Sep and Hualu Hengsheng’s 600kt/yr plant on Sep 30. In addition, Tianjin Bohai Chemical’s 350kt/yr acetic acid plant completed maintenance and restarted on Oct 5, and Sinopec Great Wall’s 300kt/yr plant restarted on Sep 28. The restarts of plants resulted in rising supplies in Oct, and the operating rate is expected to keep high with limited plant maintenance plan.

However, some plant disruptions occurred outside China in Oct. A 600kt/yr acetic acid plant in Singapore further postponed the restart due to feedstock supply issue, a 50kt/yr plant in Malaysia was shut for 1 week due to CO supply issue, and a 450kt/yr plant in Japan is poised to shut in early Dec for 1-week maintenance.

While China acetic acid supply is increasing, downstream demand remains lackluster and domestic sales are lukewarm. In terms of exports, China’s acetic acid exports reached 95.6kt in Sep, a high level in the second half of 2021. However, the exports reduced obviously in Oct with limited new orders. As a result, product inventory in acetic acid plants rose rapidly.

With acetic acid plunging, the profits are squeezed due to high CO and coal prices, but it is still profitable. As the inventory is expected to rise further and supply remains ample, China acetic acid price is anticipated to decrease continuously.

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