Acrylonitrile prices surge but anticipated decline looms ahead

In mid-April, acrylonitrile prices continued to rise without stabilizing. By April 17, the price had increased by 5.5% compared to the beginning of the month, reaching 10,550yuan/mt.

The price surge stemmed from maintenance shutdowns of several ACN units, notably Zhejiang Petrochemical's 520kt and Sierbang's 260kt units, causing a supply shortage. Despite stagnant demand and resistance to higher prices, rigid demand was driving prices upward. Additionally, the price gap between the spot and Shandong markets indirectly influenced prices in Shandong, which currently range from 10,500 to 10,600yuan/mt, with transactions trending towards the lower end.

In terms of cost, the current propylene price was insufficient to sustain acrylonitrile prices, with a theoretical cost around 9,500yuan/mt compared to the April 17 price of 6,925yuan/mt. April's settlement price might rise to approximately 10,500yuan/mt, yielding an expected ACN cash flow of 1,000yuan/mt. Despite typically experiencing breakeven or small profits, the current cash flow was attractive.

Propylene prices are unlikely to see significant increases later, and demand for acrylic fibers is weakening, prompting explicit production cut plans. Major plants are set for maintenance shutdowns, potentially reducing the operating to 50% or even 40% by month-end. Due to considerable profits, there is a clear willingness to restart idle units, with plants like Zhejiang Petrochemical, Secco and Liaoning Kingfa considering restarts. This could boost supply, but coupled with weak demand and shifting market sentiment from bullish to bearish, there may be a short, sharp downward trend in prices. The extent of the decline depends on subsequent unit restarts.