SunSirs: Difficult to Find Favorable Factors on the Demand Side, Vinyl Cyanide Prices Continued to Decline
August 05 2024 13:59:23 SunSirs (John)
Price trend
Since the end of April, the domestic vinyl cyanide market price has continued to decline, with the mainstream self pickup price dropping from 10,800 RMB/ton to around 8,800 RMB/ton, a decrease of 18.5%, which has lasted for three months. As of July 31st, there was still no positive news in the market, and the supply-demand contradiction continued to exist. In the short term, the price of vinyl cyanide may still have room for downward exploration.
The contradiction between supply and demand persisted:
The price trend of vinyl cyanide products mainly followed the logic of supply and demand. Due to the large number of maintenance and load reduction devices, the supply was temporarily tight, which stimulated price increases. Prices gradually rose from February to April this year; But starting from May, the maintenance equipment gradually resumed, and the capacity utilization rate of the vinyl cyanide industry gradually increased from less than 65% to around 83%, with a significant increase in supply.
At the same time, downstream demand in various fields was gradually entering the off-season, especially in July when ABS and amide production rates were low, and consumption in other small and medium-sized downstream fields was also showing signs of weakening.
According to statistics, the supply-demand gap of domestic vinyl cyanide products dropped to only 10,000 tons in April, but rapidly expanded to 80,000 tons in May, and remained above 50,000 tons in June and July, with a very prominent surplus situation.
Cost significantly increased:
According to the trend chart, the vinyl cyanide market fell rapidly in May, and the decline slowed down significantly from June to July, mainly due to increased cost pressure and vinyl cyanide suppliers raising prices. Since the second half of June, the price of the main raw material propylene in the Shandong market had risen from around 6,800 RMB/ton to over 7,100 RMB/ton, resulting in a significant increase in the production cost of vinyl cyanide and exacerbating the factory's loss situation.
In this situation, it cannot be ruled out that some vinyl cyanide plants will take production reduction measures, and the expected decrease in supply variables will slow down the pace of market quotations. However, as of July 31st, apart from the major overhaul plan of Jilin Petrochemical from August to October, there were still no other units with maintenance or load reduction plans. Although the losses of vinyl cyanide single products were gradually expanding, some vinyl cyanide factories had been able to maintain stable production with the considerable benefits of by-products, especially the ACH MMA production profit, which was temporarily as high as 4,000-5,000 RMB/ton.
The downward trend of future prices is difficult to change:
The downward trend of product prices caused by supply and demand contradictions is difficult to change. In the short term, downstream demand for vinyl cyanide is difficult to be optimistic. With the traditional off-season and poor economic situation, there is no obvious improvement in domestic and foreign terminal consumption. Therefore, positive support still needs to be found from the supply side. The trend of vinyl cyanide plants will be the direct factor affecting the appearance of price turning points in the future.
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