Acrylic fiber price adjustment under strong ACN price

Recently, the acrylic fiber market has been waiting for the new offers of plants. News has been that acrylic fiber price is expected to move up by about 500yuan/mt in February. However, judging by the ACN price as of Feb 10, which rose by 900yuan/mt, a 500yuan/mt increase of acrylic fiber seems too conservative. Even though AF plants have not yet announced their price plan, a higher acrylic fiber price has become the consensus within the industry. However, there are still discussions on how will the price rise and to what level will it move up to.

Viewed from the price of raw materials, cash flow of acrylic fiber has turned negative since ACN price moved up by 900yuan/mt after the holiday. And considering the settlement of ACN in February, which is likely to increase to over 11,000yuan/mt, the cash flow of acrylic fiber will reach about -665yuan/mt (calculated on the processing fee of 6,000yuan/mt). Therefore, the early market rumors of a 500yuan/mt rise in AF price is obviously not enough for acrylic fiber to maintain actual profit. Of course, this round of ACN price increase is partially attributed to the unexpected shutdown of Lihuayi’s unit, which lasts for 5-7 days. Therefore, the overall price hike of AF will be higher than previously estimated. With regard to the current cash flow of acrylonitrile, its theoretical cost is about 10,600yuan/mt. Yet, the operating rate of the industry is only about 73% so far, thus the regained profits of ACN may stimulate the restart of some idle capacity. In addition, parts of market players are hyping up the start of the 200kt ACN unit under Hainan Fine Chemical Industry. This, coupled with the restart of Lihuayi's ACN line during the weekend, have led to greater possibility of a slight decline of ACN price.

From the point of acrylic fiber plants, the increase of acrylic fiber price is only a matter of time considering the increased ACN prices. But it is learned that the inventory of major AF plants is still at over 10,000 tons, which may be unfavorable for future sales amid the soared AF price due to the large stock depletion. So it is necessary to ensure both the profits of acrylic fiber plants and the downstream purchasing. As such, the timing of price adjustment becomes particularly important. And since the overall price trend of ACN in March is still unclear, attention should also be paid to guarantee the positive cash flow of acrylic fiber in February. Therefore, there may not be much time for AF plants to adjust their offers.

For acrylic yarn mills, the rumor of rising raw material prices has stimulated some of them to stock in advance, which accelerates the destocking of acrylic fiber plants and boosts the price increase of acrylic fiber to certain extent. However, there are still mills that amid work resumption, and current orders for AF plants are mostly scattered and small, so the feedstock depletion remains limited. In this case, a surge in AF prices may greatly hit the purchasing enthusiasm of acrylic yarn mills.

Therefore, some market players suggest AF plants to have frequent small price rises in February to ensure both the buying enthusiasm of yarn mills and the improvement of cash flow of plants. Then, after catching up with the rise of feedstock, the sales strategies and offers of acrylic fiber should be adjusted flexibly according to the cash flow.