Localized Supply Eased, and Vinyl Cyanide Market Retreated from Highs

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 consumers 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 immediate 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 sector reached 69.32%, up 2.76% from the previous period, with weekly output at approximately 80,900 tons—an increase of 3,200 tons. while 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 sector rate was 53.47% (down 2.70% from the week prior), with Jilin Chemical Fiber's Hebei Aikerui acrylic unit shutting down to 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 to 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 to 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 to 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 sector—have been squeezed, prompting some companies 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 direction, albeit at a moderate pace. Market participants should also monitor possible supply-side fluctuations, as supply remains the primary factor driving price movements.