Lead-in: Since the start of July, the domestic acrylic acid market has shown a volatile upward trend. This week, the market has strengthened further, with spot prices moving up notably. During the week, the raw material propylene price surged significantly, reinforcing cost-side support. On the supply side, although some units increased their operating rates, producers held firm price-keeping intentions, and low-price goods in the market gradually decreased. On the demand side, downstream players maintained just-in-time procurement at reasonable prices, resulting in generally decent market transactions. Amid the ongoing tug-of-war between costs, supply, and demand, the acrylic acid market remained firm.
1. Cost Side: Propylene surges sharply, providing strong cost support
The core driver of this week's acrylic acid market strength came from the raw material side. During the week, the domestic propylene market saw a substantial overall surge. The two mainstream markets, Shandong and East China, rose in tandem, closing at 8,850 yuan/ton and 8,630 yuan/ton, respectively, with week-on-week increases of 10.63% and 8.55%. This round of propylene gains was driven by both macro cost logic and regional supply-demand dynamics. Geopolitical tensions saw a notable shift, pushing international crude oil prices higher, providing strong support from the cost side and elevating the cost valuation of the entire chemical raw materials sector. In the northern region, although two PDH units at Haiwei and Xintai restarted during the week, leading to a slight increase in market supply, concentrated external procurement by enterprises in the coastal area of Shandong, combined with the concentrated release of just-in-time procurement needs from other downstream external purchasers, actually tightened the availability of spot goods in circulation. Upstream producers generally maintained low inventory levels, and spot premiums continued to rise. Under the confluence of multiple positive factors, propylene had ample upward momentum, with prices rising firmly. The East China market was also constrained by periodic supply disruptions. At the beginning of the week, a typhoon caused port closures, persistently delaying the unloading of raw materials for coastal downstream enterprises. Many companies turned to truck transportation for external replenishment, further tightening the regional supply-demand balance, prompting producers to raise their quotations accordingly. The sharp increase in the raw material propylene price directly pushed up the production cost of acrylic acid, significantly increasing the cost pressure on enterprises.
2. Supply and Demand Side: Slight increase in supply, moderate demand for just-in-time procurement
On the supply side, the capacity utilization rate of the acrylic acid industry rose to 73.13% this week, up 4.34 percentage points from the previous period. Weekly output reached 74,800 tons, a month-on-month increase of 4,500 tons, or 6.40%. The main contribution came from the ramp-up of the unit at Yangzi-BASF, driving the overall industry operating rate higher. However, this periodic increase in supply did not suppress market prices. Under strong cost support, producers and traders held firm price-keeping confidence, keeping quotations steady, and low-price goods gradually diminished. On the demand side, major downstream sectors, specialty esters and SAP plants, mainly consumed their contracts and own inventories, releasing spot procurement demand cautiously, with generally average initiative in making inquiries. However, as market prices continued to rise, the atmosphere for inquiries and transactions became more active compared to the previous period. Some users made moderate follow-up purchases at appropriate prices, resulting in generally decent overall transactions, with actual transaction prices gradually moving up. In summary, the current market displays a pattern of "slight increase in supply, moderate demand for just-in-time procurement." Although supply has increased, producers remain determined to hold prices. While there are transactions on the demand side, chasing price increases is cautious. Bulls and bears are in a stalemate, and the market maintains firm operations amidst the tug-of-war.
3. Profitability: Profit turns from loss to gain, industry confidence strengthens
On the profitability side, the profit situation in the acrylic acid industry improved this week. Driven by the significant increase in acrylic acid spot prices, the industry's average profit turned from a loss to a gain. This week, the average profit for acrylic acid was 238 yuan/ton, a substantial recovery of 384 yuan/ton from the previous period's -146 yuan/ton, representing a profit increase of 263.01%. The profit recovery was mainly due to the surge in acrylic acid prices outpacing the rise in costs. Although the raw material propylene price also rose synchronously, the week-on-week increase of 14.35% for acrylic acid exceeded the 10.63% increase for propylene, leading to a notable improvement in the industry's profit margins.
4. Market Outlook
Looking ahead to next week, the East China acrylic acid market is expected to maintain a volatile consolidation pattern. On the cost side, the raw material propylene is expected to show a correction trend, weakening cost-side support somewhat. On the supply side, Ningbo Formosa Plastics and Lanzhou Petrochemical are expected to reduce their operating rates, which will lower the overall industry operating rate and correspondingly tighten goods supply. Acrylic acid plants and traders will offer flexibly. Downstream users will mainly digest earlier contracts and their own inventories, with some following up as needed, but their willingness for new orders will be cautious. Considering the supply-demand game, the acrylic acid market is likely to operate in a wide range next week.
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