SunSirs: Localized Supply Eased, and Vinyl Cyanide Market Retreated from Highs

Last week, supply from the north increased; meanwhile, downstream users resisted high raw material prices and largely adopted a wait-and-see approach, causing negotiated market prices to retreat from their highs. As of August 14, prevailing negotiated prices for ex-tank (self-pickup) transactions in the East China market were in the range of 12,000-12,200 RMB/ton, down 200 RMB/ton from the week before last; in the Shandong market, prevailing negotiated prices for delivered goods ranged from 11,700 to 11,800 RMB/ton, a decline of 250-350 RMB/ton compared to the week before last.

Easing of localized supply constraints:

Last week, Lihuayi Lijin Refining & Chemical Co., Ltd. restarted its 260,000-ton/year unit, leading to an increase in supply in the north. Meanwhile, downstream users resisted high feedstock prices and largely adopted a wait-and-see approach, causing market trading prices to retreat from their highs. However, supply in the East China region remained tight; limited short-term supply constrained the pace of the market downturn, and the price spread between northern and southern markets began to widen again. Statistics show that last week (August 7-13), the capacity utilization rate of the domestic vinyl cyanide industry reached 69.32%, up 2.76% from the previous period, with weekly output at approximately 80,900 tons—an increase of 3,200 tons. Although supply has recovered, the overall volume remains limited, and producers face no inventory pressure in the short term; as of August 12, total domestic vinyl cyanide plant inventories stood at around 33,000 tons, remaining flat compared to the previous week.

Downstream demand declined :

Last week, capacity utilization rates across key downstream industries declined. Specifically, the ABS capacity utilization rate stood at 60.70% (down 0.20% week-on-week); the acrylic fiber industry rate was 53.47% (down 2.70% from the week prior), with Jilin Chemical Fiber's Hebei Aikerui acrylic unit shutting down for 20 days of maintenance; and the acrylamide capacity utilization rate was 50.54% (down 3.23% from the week prior), as Henan Zhengjia halted operations for maintenance. Overall downstream demand has weakened.

Raw Material Costs Rose:

Raw material costs saw a significant increase over the week, while the price of vinyl cyanide retreated from its high level; consequently, theoretical production margins narrowed. Statistics indicate that as of August 14, mainstream closing prices for propylene in Shandong ranged from 8,500 to 8,650 RMB/ton, with an average of 8,675 RMB/ton—an increase of 500 RMB/ton from the previous week. The average production cost for vinyl cyanide stood at 10,675 RMB/ton, up 4.64% month-on-month, while the average production profit was 1,516 RMB/ton, a decrease of 501 RMB/ton month-on-month.

Market Outlook:

Currently, major manufacturers in East China are operating at low capacity; however, with the planned restarts of the Tianchen Qixiang and Sailboat Petrochemical units in the latter half of the month, supply constraints are expected to gradually ease. On the demand side, profit margins in downstream sectors—such as the acrylic fiber industry—have been squeezed, prompting some enterprises to curtail production or shut down operations; there is significant resistance to high raw material prices and limited buying interest. Consequently, the market is expected to continue its downward trend, albeit at a moderate pace. Market participants should also monitor potential supply-side fluctuations, as supply remains the primary factor driving price movements.

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