Acrylic prices rebounded significantly recently

Acrylic acid has experienced a significant rebound in prices in recent days after experiencing sharp rises and slumps in 2012. Analysts believe that the price of acrylic acid is expected to stabilize in the short term and may continue to increase prices after the Spring Festival. However, new capacity will increase in the future, which will form a high degree of price rebound, and manufacturers must respond by reducing costs.

Demand for supplements has driven the price of acrylic acid to rise significantly since January. The satellite petrochemical acrylic acid quoted at 12,300 yuan/ton on January 4 and rose to 13,100 yuan/ton on January 23. Satellite petrochemical sources said that the recent price increase was mainly driven by the need for downstream manufacturers to make up stocks. Due to the fact that before the price fell to a lower position, the industry’s profit margin was already very thin, and some even suffered a loss, so the willingness to raise prices was strong.

On January 20th, Shanghai Huayi's capacity of producing 110,000 tons of acrylic acid was accidentally parked. At present, the starting load of AA and BA plants is about 50%, and the ethyl ester plant is stopped. The restart time of the equipment is uncertain. Analysts believe that this has a positive impact on the short-term price increase of acrylic acid. From the perspective of the entire industry, due to the fact that the price of acrylic acid is still not high, the start-up rate of the manufacturers is low, and the compression at the supply side has created favorable conditions for price increase.

The rise in raw material propylene prices is another reason for the increase in acrylic acid prices. Arkema, a major U.S. acrylic acid and ester producer, recently announced that due to the rise in propylene prices of 15 cents/lb in January, the contract price of ethyl acrylate and methyl acrylate has increased by 11 cents/lb since February 1. Increased the butyl acrylate contract price by 13 cents/lb. Prior to this, Dow Chemical also announced that it would raise the price of acrylic acid and ester products by 9 cents/lb in February. The industry expects that BASF will also increase the price of acrylic acid and esters in February.

New capacity pressures Although acrylic acid prices rebounded in the short term, they are still not optimistic in the long term. Analysts said that in 2014, acrylic acid will enter the production peak, and the growth rate of production capacity will exceed the demand growth rate, which will mean the downturn in the industry climate.

Huatai Securities research report shows that by 2015, the world will add 2.06 million tons of capacity, of which 70% will come from China. The global growth rate of acrylic acid production capacity over demand will maintain until 2014, with overcapacity of 20%, and capacity utilization rate will decrease by 9 percentage points from 2010. The prosperity of the acrylic industry will continue to decline until 2014.

For satellite petrochemicals, the company's main acrylic acid and its downstream derivatives, currently has 160,000 tons of acrylic acid and 150,000 tons of acrylate production capacity, of which 90% of acrylic for their own use. The 450,000 tons propylene project under construction of the company is expected to be completed and put into operation by the end of 2013, which can meet the demand for 160,000 tons of acrylic acid and the newly added 320,000 tons of acrylic acid in the future.

Satellite petrochemical stakeholders believe that growth in production capacity need not be too pessimistic. On the one hand, the declining economy will lead to some planned capacity deferment or termination. On the Other hand, the company will further reduce production costs by extending the industrial chain, compared with its peers. There is a strong competitive advantage. In addition, the company's 30,000-ton SAP (high water-absorbing resin) production capacity is expected to be put into operation in mid-2013, which will make a big difference in import substitution.

Reports have shown that sanitary SAP is mainly used to produce baby diapers, adult incontinence products and feminine hygiene products. Benefiting from changes in population structure and household income growth, it is expected that the growth in domestic demand for SAP for health will remain at around 20% in the next three years. After SAP's full operation of satellite petrochemicals, it is conservatively estimated that the company's earnings per share will increase by 0.2 yuan per share.