Acrylonitrile: market inventory in the first half of 2022 and outlook in the second half

In the first half of 2022, China's acrylonitrile production capacity increased steadily, with the total domestic production capacity reaching 3.549 million tons, an increase of 260000 tons over 2021. The 130000 ton units of the second line of lihuayi and the 130000 ton units of Tianchen Qixiang were put into operation. In the first half of the year, the domestic acrylonitrile market basically showed a weak downward trend, the overall operation performance of the industry was poor, and corporate profits fell sharply compared with previous years.

Market: in the first half of the year, the domestic acrylonitrile market was affected by multiple negative external news, as well as the surplus of on-site supply, the increase of industrial inventory, the market performance was depressed, and the overall trend was weak. At the beginning of 2022, the acrylonitrile market continued to decline for 21 years. From February to March, the market price fluctuated slightly around the average online and offline. At the end of March, the epidemic broke out in Shanghai, resulting in the low start-up of terminal automobile and household appliance industries, resulting in the weakening of the downstream ABS demand for raw materials. From April to June, the domestic acrylonitrile market price continued to decline. The price of raw propylene is weak, and there is no positive support on the cost side. Under the multiple negative factors of cost, supply and demand, the acrylonitrile market continues to decline. Compared with the beginning of the year, it fell by about 2600 yuan, or about 19.6%.

In terms of profits: at the beginning of the year, before the second line of lihuayi and Tianchen Qixiang new devices were put into operation, the acrylonitrile industry was still profitable, but after the Spring Festival, the terminal started slowly, the downstream demand was weak, and the factory inventory was accumulated. However, with the second line of lihuayi and Tianchen Qixiang devices were put into operation, the on-site supply surplus was serious, the market was dominated by buyers, and the profitability of acrylonitrile was declining. At the beginning of March, the price of raw propylene rose, the cost pressure increased, but the supply and demand side was weak, the market price transmission of acrylonitrile was blocked, and the industry suffered serious losses. At the beginning of June, although the price of propylene fell slightly, the price of liquid ammonia supported strongly, and the loss of acrylonitrile intensified. At present, the prices of propylene and liquid ammonia at the raw material end are still not low, and acrylonitrile manufacturers are still at a loss.

In terms of supply, according to statistics, in the first half of 2022, the total domestic acrylonitrile output was 1.3751 million tons, an increase of 292400 tons or 27% from 1.0827 million tons in the same period last year. Although the supply has increased, the overall operation has decreased significantly this year, with an average monthly operation rate of only about 79.2%, while the average monthly operation rate in the same period last year was 92.1%. It can be seen that this year acrylonitrile has become the norm under the dual pressure of sluggish demand and oversupply. Among them, the load of Shandong Haili plant was reduced to 70% on January 31, and the whole line was shut down for maintenance on March 27, and the restart time is temporarily uncertain; Shandong kerour stopped production for two months; Shanghai Secco reduced the load after alternative maintenance; Other factories showed negative performance.

In terms of demand, acrylonitrile is mainly consumed in acrylic fiber, ABS plastic and acrylamide. In the first half of 2022, affected by the epidemic and the turbulence of the international situation, the demand side of acrylonitrile market shrank significantly compared with the same period in previous years. The main downstream ABS market started 91.24%, a decrease of about 7% compared with the same period last year, while the acrylic fiber market started to decline. Among them, the acrylic fiber plant of Shanghai Petrochemical stopped in June, with a total capacity of 160000 tons, accounting for 22% of the total domestic acrylic fiber output.

In terms of import and export, from January to may 2022, the total domestic imports of acrylonitrile were 47800 tons, a decrease of 46.9% compared with the same period last year. The average monthly import remained at 9600 tons, with the largest import volume in January, reaching 17900 tons. During the year, 260000 tons of units with annual capacity were added, domestic supply continued to increase, demand follow-up was limited, and domestic prices were low, resulting in the industry's preference to purchase low-cost domestic sources of goods and reduced dependence on imported goods.

In terms of export, from January to may, China's total export of acrylonitrile was 89700 tons, an increase of 14.2% compared with the same period last year, with an average monthly export of 18000 tons. This is because with the increase of domestic acrylonitrile production capacity, the contradiction between domestic supply and demand has increased, and export has become the main way to alleviate domestic supply pressure.

Throughout the first half of 2022, the domestic acrylonitrile market was affected by the negative external and domestic demand, and the price continued to decline. Compared with previous years, the industrial start-up was significantly reduced, and the demand shrank significantly. In the second half of 2022, China's acrylonitrile production capacity is expected to be about 850000 tons, including 260000 tons of capacity expansion of the old unit of Jilin chemical industry, 130000 tons of Jieyang of Jilin chemical industry, 200000 tons of Dongfang Petrochemical, 260000 tons of Bora of Liaoning Province. The industrial capacity will continue to expand, while the downstream ABS capacity will also maintain rapid growth. In the second half of the year, it is expected that a total of 1.2 million tons of units, including 600000 tons of Bora of Liaoning Province and 600000 tons of Jieyang of Jilin chemical industry, will be put into operation. Calculated according to 25% procurement of acrylonitrile raw materials, In the second half of the year, the demand for 300000 tons is expected to increase, which is far less than the increase of acrylonitrile production capacity.

Overall, although the raw propylene and synthetic ammonia are expected to operate weakly, they are still supported relative to the cost of acrylonitrile. On the supply side, it is expected that there will still be new capacity increase, industry overcapacity, and factory load reduction and production reduction may become the norm. Recently, acrylonitrile market performance is stable and shows signs of bottoming out. Acrylonitrile has no downward space, and the market may operate weakly and stably in the short term. However, from the perspective of the whole second half of the year, the decline of acrylonitrile market price is difficult to change.