This week, the domestic acrylic acid market experienced a significant decline in prices due to multiple negative factors. Affected by the continuous weak demand during the traditional off-season, the market situation has taken a sharp downturn, and prices have been falling all the way. According to monitoring data from Shengyi Society, as of July 22, the benchmark price of acrylic acid was 7100.00 yuan/ton, a decrease of 0.93% from 7166.67 yuan/ton at the beginning of this month.
The core pressure of the current market downturn mainly comes from the expected increase in supply side and the change in market sentiment. Specifically, the production facilities that were previously shut down are gradually resuming operations, and the expected increase in supply in Shandong has gradually become a reality; At the same time, the subsequent new supply in southern China is also about to be released. These factors collectively exacerbate the market’s concerns about oversupply, leading to a significant bearish sentiment in the overall market.
Recently, the operating rate of the acrylic acid industry has shown structural fluctuations. The main reason is that the equipment in Shandong region maintains high load operation, which promotes the increase of the national average comprehensive load; However, the East China region was affected by a power failure at the Pinghu Satellite Chemical Base (with an acrylic acid production capacity of 680000 tons per year), resulting in an unexpected short shutdown and slow recovery of the equipment, leading to a significant decrease in regional load. Despite the coexistence of multiple device startups and shutdowns, the overall operating rate of the industry still recorded a slight increase.
The increase in supply, especially the release of new production capacity in Shandong, and the slowdown in downstream consumption have created a scissors gap, intensifying the pressure of supply-demand imbalance and spreading bearish sentiment in the market. It is worth noting that the oxidation device synchronized with the satellite chemical Pinghu base malfunctioned, unexpectedly causing a shortage of spot supply in the region and partially buffering the downward trend; The decline rate of spot prices in East China has slowed down, and enterprise auction transactions have slightly rebounded. The acid price has temporarily stabilized in the range of 6800-7000 yuan/ton; The fault in East China is a force majeure disturbance, and there is a definite expectation of increased production in Shandong/South China. If a 300000 ton new plant in South China is about to be put into operation, it will continue to suppress the market, and the weak market situation in the medium and long term is difficult to change.
The significant decline in the price of acrylic acid has led to a significant narrowing of the industry’s profit margin, and all previous gains have been reversed. This round of decline has also been transmitted downstream, with the profit of mainstream product butyl acrylate shrinking synchronously. The root cause is the decline in the price of raw material acrylic acid and the weak trend of another raw material n-butanol.
The future market is expected to show a wide range of fluctuations. The driving factors are: the relief of short-term shutdowns in East China on the supply side, the fading of positive news, the increase in production brought by the resumption of production in South China, the downstream purchasing willingness and pace on the demand side, and the market sentiment and trading mentality of traders. The current supply side is bearish for the recovery of East China and the possibility of increased growth in South China, which may exacerbate market bearish sentiment. The risk of price decline still exists. In the future, it is necessary to closely monitor factory price guidance and downstream actual procurement trends.