Price trend

Last week, overall production at East China factories decreased, with one unit at Siba Chemical shutting down and the Jilin Chemical Jiyang plant undergoing temporary maintenance. Supply began to decrease, while downstream users started to stock up, leading to a decrease in company inventories. The vinyl cyanide market bottomed out and stabilized. As of January 23rd, the mainstream ex-tank price at East China ports was 7,250 RMB/ton, an increase of 50 RMB/ton compared to the week before last; the short-haul delivery price in the Shandong market was 7,050 RMB/ton, a decrease of 50 RMB/ton compared to the week before last.

Supply reduced

Last week, overall production at factories in East China decreased. Sinopec's 260,000 tons/year vinyl cyanide plant was shut down, reducing the number of operating units to two, and lowering the operating rate to 50%; Jilin Chemical (Jieyang)'s 130,000 tons/year vinyl cyanide plant was shut down for maintenance starting January 20th, expected to last approximately 19 days; Shandong Haijiang's 130,000 tons/year vinyl cyanide plant remains shut down for maintenance. Overall supply had begun to decrease. According to statistics, as of January 22nd, the weekly capacity utilization rate of domestic vinyl cyanide factories was 75.22%, a decrease of 2.93% compared to the previous week; weekly production was approximately 85,700 tons, a decrease of 3,400 tons compared to the previous week. Total inventory was approximately 57,300 tons, a decrease of 4,200 tons compared to the previous week, indicating a decrease in company inventory.

Demand Increased:

Last week, overall production in major downstream industries declined. Zhejiang Petrochemical reduced its operating rate, and the ABS capacity utilization rate fell to 66.8%, a decrease of 3% compared to the week before last. The acrylic fiber capacity utilization rate was 65.97%, unchanged from the week before last; the acrylamide capacity utilization rate was 56.29%, a decrease of 0.36% compared to the week before last. However, lower prices attracted some buyers, and downstream users began to stock up in moderate quantities, leading to an overall increase in demand.

Costs rose

Last week, upstream propylene prices continued to rise, increasing the cost of raw materials for vinyl cyanide production. However, vinyl cyanide prices remained low and volatile, further exacerbating production losses last week. According to statistics, as of January 22nd, the price of propylene in Shandong was 6,175 RMB/ton, an increase of 30 RMB/ton compared to 6,145 RMB/ton at the end of the previous week. The average production cost of vinyl cyanide was 8,430 RMB/ton, a 0.06% increase compared to the previous week. The average production profit for vinyl cyanide was -1220 RMB/ton, a decrease of 45 RMB/ton compared to the previous week.

Market outlook

As of Janruary 23, due to localized plant fluctuations and proactive production cuts, the industry's capacity utilization rate had dropped to around 70%, which may alleviate oversupply pressure.  Furthermore, lower prices were attracting some buyers. Therefore, there is an expectation of an upward trend in the domestic vinyl cyanide market. However, considering the temporary weakening of demand before and after the Spring Festival, the market rebound potential will still be limited.

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