In the first quarter, acrylonitrile chain prices declined year-on-year, the pace of capacity expansion continued, and most products continued to lose money.

1. Chain prices declined year-on-year in the first quarter

In the first quarter, acrylonitrile chain prices declined year-on-year, and only ammonia prices rose slightly year-on-year. In recent years, the production capacity of chain products represented by acrylonitrile has continued to expand, and the pattern of oversupply of some products has gradually emerged, with product prices falling significantly compared with the same period last year. Among them, ABS is the largest year-on-year decline in chain product prices, down more than 20% year-on-year. As of the end of the first quarter, the average market price of acrylonitrile in East China ports was RMB10,416 per ton, down 8.91% year-on-year and up 0.17% from the fourth quarter of last year.

As for the acrylonitrile industry itself, the capacity of acrylonitrile industry continued to expand in the first quarter. According to Zhuo Chuang information statistics, the acrylonitrile industry added 330,000 tons of capacity in the first quarter, up 8.97% from the end of 2022, with a total capacity of 4.009 million tons. From the industry’s own supply and demand situation, total acrylonitrile production was once around 760,000 tons, down 2.68% year-on-year and up 0.53% YoY. In terms of downstream consumption, acrylonitrile downstream consumption was around 695,000 tons in the first quarter, up 2.52% year-on-year and down 5.7% sequentially.

Chain profit loss in the first quarter was mainly a chain profit loss in the first quarter

In the first quarter, although the profit of some acrylonitrile chain products increased YoY, most of the products continued to lose money. ABS changed significantly in the positive profit products, which dropped by more than 90% YoY. In the first quarter, acrylonitrile prices rose and then fell, with overall prices rising slightly from the fourth quarter of last year and cost pressures on downstream products increasing. In addition, the pace of ABS capacity expansion continued, and the cost pressure on plants increased significantly, with manufacturers’ profit margins narrowing significantly. In terms of acrylonitrile, due to the obvious losses of factories in 2022, manufacturers were more flexible in adjusting equipment loads, and the average industry start-up load factor dropped significantly in the first quarter of 2023, with overall prices rising and then falling, and the degree of losses of acrylonitrile factories narrowed slightly compared with the fourth quarter of last year. By the end of the first quarter, the average profit of acrylonitrile plants was close to $181/ton.

2. Chain trend in the second quarter is still not optimistic

In the first quarter, acrylonitrile prices rose and then fell, and the loss level of plants decreased slightly. Looking ahead to the second quarter, the overall trend of the chain is still not optimistic. Among them, the overall trend of acrylic acid and synthetic ammonia is expected to fluctuate slightly; in acrylonitrile, some factories plan to repair, but downstream demand is not expected to improve, and it is difficult for prices to break through the first quarter high; in downstream products, acrylic acid terminal factory orders are general, and manufacturers may have the risk of price decline, ABS new production capacity continues to be released, and the domestic general material supply is relatively oversupplied, and prices may remain relatively low. The overall chain is still not optimistic.