SunSirs: With Low Inventory and Reduced Supply, the Price of Vinyl Cyanide Rose During Off-Season

At the start of August, the domestic vinyl cyanide market saw prices surge to the 12,000–12,500 RMB/ton range, marking an increase of 600–700 RMB/ton from late July. Since the upward trend began in mid-July, prices have risen by a total of 3,000 RMB/ton—a 32.1% increase. A contraction in supply was the primary driver of this sharp rally. This factor was compounded by persistently low industry inventories, concentrated restocking by middlemen, support from crude oil costs, and producers' desire to recover losses. Additionally, buyers with essential needs were compelled to replenish stocks, bullish sentiment surged across the market, and producers repeatedly raised their listed prices; consequently, the benchmark for spot transactions rose in tandem, resulting in a counter-seasonal price rally.

As of August 5, ex-tank prices for vinyl cyanide at East China ports had reached 12,300–12,400 RMB/ton, while ex-factory prices in the Shandong market held steady at 12,000 RMB/ton. Current price levels have surpassed the highs seen during the Middle East conflict in April, as well as the peaks recorded in the first quarter of last year—which were also driven by unexpected supply contractions. This rapid, substantial price surge has been fueled not only by persistent shortages of spot supplies but also by reduced contract deliveries and simultaneous supply cutbacks in both northern and southern regions.

Inventories in the vinyl cyanide industry remained consistently low

Prior to the recent round of price increases, overall inventory levels in the domestic vinyl cyanide industry were already on the low side of average; both Keluer and Sinochem Quanzhou had only recently restarted operations in late June. During the first half of July, weak demand combined with rising supply caused prices to retreat rapidly to near 9,000 RMB/ton; meanwhile, inventories fell further to low levels, with vinyl cyanide producers, in particular, holding limited stocks. Although prices subsequently rebounded driven by cost factors, market participants generally maintained a bearish outlook on the future, leading them to continue operating with low inventory levels.

Unplanned plant shutdowns or load reductions led to a temporary, concentrated contraction in supply.

Starting in late July, a wave of scheduled maintenance shutdowns across the industry led to a marked contraction in supply. Sierbang's million-tonne-scale unit began staggered maintenance and operated at low capacity for an extended period, resulting in a significant monthly supply shortfall. Concurrently, the shutdown of Tianchen Qixiang's vinyl cyanide unit—compounded by the suspension of operations at Fushun Petrochemical—directly reduced spot supply in the north. Zhenhai Refining & Chemical also announced plans to cut vinyl cyanide output due to maintenance on its methionine unit (a downstream derivative facility); reports indicate that its contract supply for August was effectively halved, forcing buyers to source material from the open market and further driving up prices. Subsequently, Lihuayi's unit shut down due to a malfunction and halted shipments for a week, causing a sudden tightening of regional spot supplies. These factors, combined with the cumulative effect of persistently low inventory levels, created a market where vinyl cyanide was in short supply, fueling further price increases.

As the first week of August begins, vinyl cyanide units that had previously shut down have yet to restart, further exacerbating bearish sentiment regarding future supply. Zhenhai Refining & Chemical plans to reduce its operating load to 50–60% by mid-August, which will further curtail major supply sources in East China and reinforce expectations of future shortages; meanwhile, the industry's capacity utilization rate remains below 70%. Although units operated by Lihuayi, Tianchen Qixiang, and Sailboat (Si'erbang) are expected to resume operations soon, lingering uncertainty keeps market sentiment cautious, and holders of inventory are maintaining firm, high price quotes.

Significant Increase in Production Margins

While vinyl cyanide prices have risen rapidly, the price of upstream propylene has trended downward; specifically, propylene prices in the Shandong market have gradually fallen to fluctuate at or below 8,000 yuan per tonne. Consequently, the price spread between the two has widened to 4,000 yuan per tonne, significantly boosting theoretical profit margins for vinyl cyanide production. These substantial profits are expected to drive the active restart of previously idled production units; amidst expectations of increased supply, the vinyl cyanide market is currently consolidating after its recent rally.

Downstream Off-Season; Weak Essential Demand

The recent sharp rise in vinyl cyanide prices has been driven primarily by supply-side constraints, while demand has remained sluggish. Operating rates in the acrylic fiber sector have held steady, maintaining a baseline level of essential procurement; however, production rates for major downstream products—such as ABS and acrylamide—have continued to decline, weighed down by weak end-market orders for home appliances and plastics. Overall essential demand remains weak, struggling to keep pace with the rising spot prices. Faced with rapidly increasing raw material costs, downstream factories are showing growing resistance; most are limiting purchases to immediate needs rather than engaging in large-scale stockpiling. Consequently, as supplies gradually recover, the market is expected to pull back, though fluctuations on the supply side bear watching, as uncertainties persist.

Market Outlook

In the latter half of August, Zhenhai Refining & Chemical will further reduce operating rates, while units such as those at Sailboat Petrochemical will gradually ramp up production; additionally, Rongsheng Petrochemical is set to bring 660,000 tonnes of new capacity online starting in September, leading to a significant overall increase in supply. While the tight balance of the domestic spot market is unlikely to ease rapidly in early August due to persistently low industry inventories, the continued recovery of vinyl cyanide production margins may prompt some operating units to slightly increase output to offset the supply gap. Meanwhile, as overseas units resume production following maintenance and import volumes rise, vinyl cyanide prices are expected to retreat, though they will likely remain at relatively high levels. The downward trend in prices may accelerate in the latter half of August as supply recovers. Industry participants are advised to purchase based on actual needs, avoid blindly stockpiling at high price points, and focus instead on maintaining safe inventory levels for raw materials.

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