This week (January 6-10, 2025), the price center of the upstream raw material market for viscose staple fiber remained stable, with low inventory levels in the market and continued support from both the cost and supply sides. However, downstream market procurement enthusiasm was not high, and cotton yarn enterprises had a certain degree of risk aversion. They held onto the demand side and continued to be light, with various viscose staple fiber manufacturers lowering their quotes to varying degrees, resulting in a narrow decline in actual market transaction prices.

According to the Commodity Market Analysis System of Shengyi Society, as of January 10th, the average market price of viscose staple fiber was 13680 yuan/ton, a decrease of 140 yuan/ton from the same period last week, with a weekly decline of 1.01%.

In terms of cost: This week (January 6-10, 2025), the market price of raw material dissolution slurry continued to maintain a stable trend, the market price of auxiliary material liquid alkali rebounded and stopped falling, the market price of sulfuric acid slightly decreased, and the market price center of raw material remained roughly stable. The average production cost of adhesive short fiber did not change much. As of early January, the price of domestically produced dissolving pulp is around 7900 yuan/ton, the price of outer broad-leaved pulp is around 970 US dollars/ton, and the price of coniferous pulp is around 1070 US dollars/ton.

Supply inventory: The operating rate of the adhesive short fiber industry remained at around 87.03% this week, with a slight increase in production compared to last week. The start-up rate of various adhesive short fiber manufacturers’ equipment did not fluctuate significantly during the week, and the on-site supply remained stable; There is currently no pressure on the inventory level on site, but the downstream delivery speed has slowed down, and the overall inventory level on site is showing an increasing trend.

On the demand side: The downstream cotton yarn market replenishes according to demand, and prices remain stable. The market is in the traditional off-season of demand, coupled with the approaching Spring Festival holiday, downstream manufacturers have limited demand for purchasing, and multidimensional demand is holding on to signing orders. Some manufacturers’ orders can be maintained until the end of February, and the demand side performance is weak.

Future forecast

The market for dissolving pulp, the main raw material of viscose staple fiber, may not change much, and the cost side support is stable. Downstream manufacturers have plans to reduce production and have holidays near the Spring Festival. The actual transactions on site are limited, and the demand for replenishment is limited. Therefore, it is difficult for the demand side of the viscose staple fiber market to improve next week. Business analysts predict that the domestic adhesive short fiber market will maintain stable operation in the short term.

According to the Commodity Market Analysis System of Shengyi Society, the PP market was mainly sorted out in early January, and the price changes of most brand products were relatively narrow. As of January 9th, the mainstream offer price for wire drawing by domestic producers and traders is around 7605 yuan/ton, a decrease of -0.54% compared to the price level at the beginning of January.

Price trend

In terms of raw materials:

In terms of international crude oil, due to the strengthening of the US dollar at the end of December and the contraction of consumption, oil prices have weakened. However, with the recent rebound in the market and the continued positive impact of the OPEC+production reduction plan delay, coupled with strong demand in Asia, there has been a rebound in support for the upstream of PP in the far end. Domestic demand for propylene remains strong, with an increase in midstream stocking operations, while the market for propane is weak due to external influences. Overall, in early January, the overall market trend for PP raw materials was more bullish than bearish, and the support on the cost side was still acceptable.

Supply side:

In the first half of the year, there was a mutual occurrence of maintenance and production in domestic PP enterprises, and the overall load level remained stable with small fluctuations. The load of enterprises such as Daxie Petrochemical and Zhonghan Petrochemical has gradually returned, and overall, the industry’s overall load has increased by about 0.5% to 78.5%. The domestic PP shipment volume is flat, with an average weekly output of around 730000 tons. Although some newly put into operation facilities are unstable, the supply is still abundant. Overall, the supply side provides average support for PP spot prices.

In terms of demand:

Within ten days, the demand for PP tends to lean towards rigid demand. Due to seasonal factors, the consumption level of woven bags such as fertilizers, cement, and rice remained stable with a slight decrease during the first ten days. The consumption level of plastic weaving has also declined narrowly, and the willingness to hold positions has cooled down; As the end of the lunar calendar approaches, there is a decline in business operations and a mutual phenomenon of stocking up. The slow release of some pre holiday replenishment demand has to some extent boosted consumption. Overall, the demand side tends to have weak fluctuations in most aspects.

Future forecast

In early January, the domestic PP market prices fluctuated and consolidated. Fundamentally speaking, the overall performance of upstream raw materials in supporting PP is average. The industry supply is basically flat. According to consumer feedback, businesses are cautious about future terminal consumption and tend to focus on restocking for essential needs. In the short term, it is expected that PP prices will remain stagnant.

The phthalic anhydride market will first rise and then fall in 2024

According to the Commodity Market Analysis System of Shengyi Society, as of December 31st, the price of phthalic anhydride in neighboring countries was 6600 yuan/ton, which first increased and then decreased compared to the price of phthalic anhydride of 7662.50 yuan/ton on January 1st, with an overall decrease of 13.87%. The price of raw material ortho xylene first rose and then fell, and the cost support of phthalic anhydride was insufficient. In addition, the price of plasticizers fluctuated and fell, putting great pressure on the price of phthalic anhydride to decline; Plasticizer companies are operating at a high level, and the demand for phthalic anhydride procurement is active, which still supports the demand for phthalic anhydride.

Annual production capacity statistics of phthalic anhydride

From the production capacity statistics chart of phthalic anhydride, it can be seen that the production capacity of phthalic anhydride has been surplus for many years, and the operating rate of phthalic anhydride is about 60%. The phthalic anhydride industry is facing significant supply-demand contradictions. Due to overcapacity, the situation of oversupply in the market has intensified, leading to a continuous decline in the price of phthalic anhydride.

In 2024, the price of raw material ortho benzene first rose and then fell

According to the Commodity Market Analysis System of Shengyi Society, as of December 31st, the price of ortho xylene was 6700 yuan/ton, which first increased and then decreased compared to the price of 7600 yuan/ton on January 1st, with an overall decrease of 11.84%. In 2024, the price of ortho phthalic anhydride will decline, and the cost of ortho phthalic anhydride will decrease, increasing the downward pressure on ortho phthalic anhydride. The weak adjustment of industrial naphthalene prices has led to a decrease in the cost of naphthalene phthalic anhydride. There is significant downward pressure on the overall cost of phthalic anhydride raw materials and the price of phthalic anhydride.

Demand side: Significant decline in DOP market in 2024

According to the Commodity Market Analysis System of Shengyi Society, as of December 31st, the DOP price was 8226.25 yuan/ton, a significant decrease of 31.97% compared to the DOP price of 12061.67 yuan/ton on January 1st. The price of plasticizer DOP will continue to decline in 2024. Although the price of plasticizer DOP briefly increased in April, May, September, and October due to the impact of peak and off peak seasons, the overall downward trend is difficult to change. In 2024, the supply and demand of the plasticizer industry chain will be relatively balanced, and the price of plasticizer DOP will decline, which is negative for the raw material phthalic anhydride market.

Future forecast

According to the data analyst of Shengyi Society’s phthalic anhydride products, in terms of cost, the price of ortho xylene has fallen, the price of industrial naphthalene is weakly consolidating, the cost of phthalic anhydride has decreased, and there is significant pressure for the cost of phthalic anhydride to decline; In terms of supply and demand, oversupply of phthalic anhydride has become the norm, with limited support for its upward trend and significant downward pressure. Overall, there is significant pressure for cost reduction and oversupply, and it is expected that the phthalic anhydride market will experience a weak decline in the future.

Review of Acetic Acid Market in 2024

The domestic acetic acid market will continue to fluctuate in 2024, with overall prices falling weakly. According to the Commodity Market Analysis System of Shengyi Society, the average price of acetic acid at the end of the year was 2970 yuan/ton, an increase of 250 yuan/ton from 3200 yuan/ton at the beginning of the year, with an overall decline of 7.19%. From the annual trend, the highest price of acetic acid was 3675 yuan/ton, appearing in mid August, and the lowest price was 2770 yuan/ton, appearing in early November, with a maximum amplitude of 24.63%.

From the monthly K-bar chart of acetic acid in 2024, the price fluctuated throughout the year, and the specific analysis can be divided into four stages:

Interval oscillation (January to June), frequent maintenance plans for acetic acid plants in the first half of the year, and most companies’ plant changes are relatively short, resulting in insufficient sustainability of positive news. In addition, downstream purchases are mainly long-term, and are not greatly affected by prices, which actually has a certain degree of suppression on the rise of acetic acid prices, leading to a decline in acetic acid prices after multiple increases.

Strong upward trend (mid July to mid August), during which there were many unexpected shutdowns of equipment and some maintenance delays, resulting in concentrated factory maintenance and a significant decline in the utilization rate of acetic acid production capacity. The market supply was reduced, and downstream replenishment sentiment was strong, supporting the strong upward trend of acetic acid market prices.

Weakly bottoming out (late August to early November), with the recovery of maintenance equipment, the supply of acetic acid in the market has increased, and the supply-demand contradiction in the market has gradually emerged. Traders are eager to settle for safety, and the price of acetic acid continues to decline. However, downstream demand is not as expected, and the price decline does not decrease. Manufacturers’ shipments are hindered, inventory pressure increases, and the mentality of buying up and not buying down leads to a continuous bottoming out of acetic acid prices.

Narrow range upward trend (mid November to December), supply side news released again, with some facilities shutting down and reducing load, resulting in a slight decrease in capacity utilization rate, which brings certain benefits to the market. Although the on-site supply is still high, the phased reduction has also driven the recovery of acetic acid prices.

Outlook for 2025:

In terms of supply, driven by considerable profits, the production capacity of acetic acid will continue to increase in 2024, with a production capacity of 12 million tons within the year. The domestic supply performance is sufficient, and there are still plans to add new production capacity for acetic acid in the future. It is expected that 5.9 million tons will continue to be put into operation in 2025, and there may be overcapacity at that time. The expected price of acetic acid in 2025 is weak.

In terms of imports and exports, according to data released by the General Administration of Customs, the performance of China’s acetic acid import market in 2024 is relatively weak. From January to November, the cumulative import volume of acetic acid in China was 33200 tons, a decrease of 6800 tons compared to the same period last year; The cumulative export volume from January to November was about 1.0278 million tons, an increase of 269500 tons or 35.54% compared to the same period last year. Domestic acetic acid is running weakly, and the export market is increasing.

In terms of demand, new production capacity is planned to be put into operation for downstream products such as PTA, acetate esters, and vinyl acetate in 2025. There may be some favorable support on the demand side, but downstream digestion will mainly focus on long-term production, and follow-up needs to be monitored in the later stage.

Overall, the supply growth rate of acetic acid market in 2025 is significantly higher than the demand growth, and the supply-demand contradiction in the market continues. The price market continues to be weak and volatile. In the future, specific attention should be paid to the supply capacity allocation, export market, and downstream follow-up situation.

In 2024, there will be no new production capacity added to the domestic acrylonitrile market, coupled with an increase in parking and production cuts. The temporary supply tightening will drive up prices and restore profits, resulting in a wide range of fluctuations in the acrylonitrile market. At the beginning of the year, the price was 9816 yuan/ton, and at the end of the year, it was 9316 yuan/ton, a decrease of 5.05% compared to the beginning of the year; The high point of the year is 10863 yuan/ton, the low point is 8067 yuan/ton, and the amplitude is 34.66%.

Starting from February, the supply gradually decreased and the market opened up an upward channel. Although the overall downstream demand growth during this period was lower than expected, the fundamentals still showed a temporary tightening trend, which stimulated the gradual rise of acrylonitrile prices. In April, the increase was significantly expanded, and the price quickly surged to the highest point of the year. Starting from May, the industry’s capacity utilization rate gradually increased to over 80%. At the same time, downstream demand entered the traditional off-season from June to August. Under the contradiction between supply and demand, acrylonitrile prices continued to decline, and in late August, prices fell to the lowest point of the year.

Production losses combined with inventory pressure have led to some acrylonitrile factories voluntarily reducing production, while major factories in East China have reduced their equipment load, resulting in continued increase in cost pressure. In the last week of August, the domestic acrylonitrile market bottomed out and rebounded after nearly four months of decline. However, due to the lack of substantial improvement in fundamentals and the discontinuous follow-up of actual demand, the domestic acrylonitrile market entered a consolidation state after a rapid rise at the end of August.

In late October, due to the planned maintenance, fault reduction, and shutdown of some manufacturers’ facilities in East China, the overall industry production was at a low level, which stimulated the price of acrylonitrile to rise again. At the end of the year, on the one hand, the price of raw material propylene fell, while the previously shut down acrylonitrile plant was restarted again, and the supply side rebounded, causing a slight decline in acrylonitrile prices again.

Outlook for Acrylonitrile Market in 2025

Cost aspect: Peak production capacity of propylene, expected decrease in acrylonitrile cost aspect

2024-2025 will still be the peak period for the production of propylene, and the propylene production capacity with PDH as the production path will converge and be put into operation. In 2024, the new production capacity will be 6.35 million tons per year, and the domestic propylene production capacity base will be increased to 70.44 million tons per year. The trend of propylene production capacity exceeding propylene consumption is further expanding. 2025 is still the peak stage for propylene production capacity investment, and propylene production capacity with PDH as the production path will be intensively put into operation. With a significant increase in propylene supply, supply side pressure will further increase, which will have a certain negative impact on the propylene market.

The production process of all acrylonitrile plants in China is the propylene ammonia oxidation method, which usually requires 1.05 tons of propylene and 0.5 tons of synthetic ammonia to produce 1 ton of acrylonitrile. In the production process of acrylonitrile, the overall proportion of raw material cost is around 75%. For acrylonitrile factories, the main raw material propylene is mostly self produced, so its cost is closely related to the production cost of raw material propylene.

Based on a comprehensive analysis of crude oil and supply and demand, the supply and demand as well as cost pressures in the propylene market will continue to rise in 2025. It is expected that the center of gravity of propylene prices may decline compared to 2024. However, due to the continued high volatility of international crude oil expectations and the good support of propylene costs, the expected decline is relatively controllable. Taking the Shandong market as an example, it is expected to fluctuate within the range of 5000-7000 yuan/ton in 2025, with high-frequency fluctuations in the range of 5500-6500 yuan/ton. The low point of market prices is expected to occur in the first quarter, and the high point is expected to occur in the third quarter.

Supply side: Acrylonitrile production capacity continues to expand, supply side expectations continue to increase

By the end of 2024, the total production capacity of acrylonitrile in China will remain at 4.399 million tons per year, and the annual capacity utilization rate of the acrylonitrile industry will be around 78.34%.

However, according to statistics, there are multiple sets of new production capacity plans totaling 1.31 million tons per year planned to be put into operation in China by 2025. The increase in supply will bring pressure to the acrylonitrile market in 2025. At that time, the number of domestic acrylonitrile production enterprises will also increase to 21, and the industry concentration will further decrease. While overcapacity will increase, the impact of fluctuations in individual units on market trends will also weaken.

Demand side: ABS remains the main downstream demand growth point

The downstream consumption of acrylonitrile is relatively extensive, mainly concentrated in the three major fields of ABS, acrylic fiber, and acrylamide, as well as a small amount applied in industries such as nitrile latex, nitrile rubber, polymer polyols, and carbon fiber.

Among the three major downstream demand areas, there is already a risk of overcapacity in the acrylamide and acrylic fiber industries. According to information statistics, there are no plans for new production capacity in the acrylamide and acrylic fiber industries by 2025. The ABS industry remains the main demand growth point, with a fast pace of capacity expansion. In 2025, various related enterprises announced a total of approximately 4.5 million tons/year of new production capacity.

The main consumption area of ABS is in the electrical appliance manufacturing industry, accounting for more than 70% of China’s total ABS consumption in 2024, with household appliances accounting for the largest proportion, accounting for more than 45% of the total consumption. In the field of household appliances, the enterprises with the largest consumption of ABS include Gree Electric, Midea Electric, Qingdao Haier, Sichuan Changhong, Meiling Electric, Qingdao Hisense, etc.

From the analysis of the output of the home appliance market in the past 10 years, the era of rapid growth in white goods production has passed, and home appliances belong to durable goods. In recent years and in the future, with the downturn of the real estate market and the sluggish demand for end products, the boost effect of the white goods market on the emerging demand for ABS is limited. Its overall consumption growth rate is still slow, and the industry’s operating rate has gradually decreased from over 90% to 60-70% this year. Therefore, its production growth is far behind the capacity growth rate. And ABS has a relatively low unit consumption of acrylonitrile (22%~25%).

Import and export: Acrylonitrile exports may still face resistance by 2025

With the gradual emergence of overcapacity in domestic acrylonitrile production, exports have become an important component of acrylonitrile demand. Since 2021, China has transformed from a net importer of acrylonitrile to a net exporter. Although the export volume in 2023 has slightly decreased compared to 2022 due to shrinking overseas demand, and domestic acrylonitrile plants are operating at low profits with low willingness to start production, there has been a tight balance of supply in certain periods of time, resulting in some low-priced imported goods to cover the gap and an increase in import volume. But in 2024, the export volume will basically maintain around 20000 tons or more per month, far exceeding the import volume. However, given that the global economy has entered a “low growth normal”, the expected global economic growth in 2025 is still slow, and acrylonitrile exports may still face certain obstacles.

Overall, based on the current downstream demand growth, it is difficult to fully digest the concentrated release of acrylonitrile production capacity. The expected pattern of oversupply in the domestic acrylonitrile industry is difficult to improve, and it is expected that the industry’s profits will continue to be in a low period. The production cost of products will become a key competitive factor for acrylonitrile enterprises.

Market forecast: An acrylonitrile analyst from Shengyi Society believes that the cost of acrylonitrile is expected to decrease in 2025, and the demand increment is still slightly insufficient under the trend of supply and demand growth. The industry’s oversupply pattern will intensify; In addition, the global economy has entered a “low growth normal”, and acrylonitrile exports may still face certain obstacles. Overall, the industry competition is becoming increasingly fierce, the operating rate is further declining, and the price center may slightly decrease compared to 2024.