Acetic acid:Looking at the market through supply and demand data

Acetic acid: Looking at the market through supply and demand data

Since the beginning of June, the domestic acetic acid price has been falling all the way. As of August 17, the price of acetic acid in Jiangsu has fallen by as much as 2,200 yuan/ton within two and a half months.

In March and May this year, there were two major rebounds in acetic acid. The turning point was that as the price of acetic acid approached the cost line, traders and downstream users actively entered the market to purchase, and acetic acid factories were also reluctant to sell, and supply and demand changed under the change of mentality. The fundamentals are favorable in stages, driving the market up. According to the data of Zhongyu Information, the theoretical profit value of the acetic acid sample enterprises in East China is already negative, and the pressure on the cost side is reflected again. Can the price of acetic acid bottom out here?

(1) The start of construction remains high and the domestic supply is abundant

From May to June this year, several sets of acetic acid plants, such as Nanjing Celanese, Nanjing INEOS, Hebei Kingtao, Shandong Lunan Chemical, and Huayi Shanghai, had long-term maintenance, so the start-up during this time period was significantly lower than the normal level. . However, after July, with the recovery of the maintenance equipment, the domestic acetic acid operating rate increased. Since July, the domestic average operating rate of acetic acid has been above 8.5%.

(2) Weak recovery in the field of terminal consumption and poor downstream construction

Due to the recovery and sluggish growth in domestic real estate and other end-consumption fields, the upstream and mid-stream raw materials of chemical products are generally facing the pressure of destocking. The sales of finished products are not smooth, and the profits are limited or even loss-making, forcing factories to shut down or reduce negative production, and the main downstream operations of acetic acid have also been reduced to varying degrees (as shown in the figure below): The current operating rates of ethyl acetate and PTA are basically at the lowest level during the year; Chloroacetic acid and vinyl acetate are also low; in addition, it is reported that small downstream enterprises such as printing and dyeing, chemical auxiliaries, etc. in East China have concentrated on parking.

In addition to the low points of the year, the main downstream acetate and PTA construction in July and August were also significantly lower than the same period last year (specific statistics are shown in the table below). (From 2022 to now, in addition to the increase of 3.5 million tons of PTA downstream acetic acid production capacity, the increase of other main downstream effective production capacity is limited)

(3) The foreign supply gap is not large, and the export maintains the normal level

  The price of crude oil has fallen, the cost advantage of coal-based acetic acid production in China is not obvious, and most of the acetic acid plants in Europe, America and Asia are currently operating normally, and the foreign supply gap is not large. Around 70,000-80,000 tons.

(4) The contradiction between supply and demand intensifies, and social inventory increases

It can be seen from the above that since July, the domestic acetic acid operating rate has been higher than the previous period. Based on the impact of the epidemic as the triggering factor, small downstream enterprises have generally stopped work, and large downstream enterprises have significantly reduced the start of construction. The demand side is weak and shrinking, and exports are also quite satisfactory. Supply increases, but demand decreases instead of increasing, resulting in an upward trend in the social inventory of acetic acid. According to statistics from Zhongyu Information, as of mid-August, the total social inventory of acetic acid has exceeded 180,000 tons.

It is difficult for the demand side to improve in the short-term, and the inflection point of the market depends more on changes in the supply side. According to market sources, a 700,000-ton/year acetic acid plant in South China was suddenly shut down, and the restart time was not determined; a plant in East China was shut down for 2-3 days for a short period of time; and the current cost of acetic acid plants was under great pressure. At the current price, it is also appropriate to stock up. However, based on the fact that the current supply of acetic acid is still sufficient and there is no more good news, most industry players are cautious and wait and see, and the short-term acetic acid market is expected to run weakly. However, at the current price, the decline slowed down in the later period.

In the later stage, it is necessary to pay attention to whether there is an acetic acid plant shutting down under the pressure of the cost side; in addition, some products are currently affected by power cuts in local areas, and the phenomenon of stopping or reducing the load has occurred.