Cui Beibei, JLC

The capacity of acrylonitrile has been expanding fast in recent years, outpacing the growth in demand. The imbalance has resulted in a change in the market structure.

Market features

The acrylonitrile industry has turned from excessive supply to short supply to loosened supply. With the rise of downstream ABS industry, the demand for acrylonitrile is increasing, turning the acrylonitrile market into supply tightness. As a result, the profits of acrylonitrile producers rose sharply from 2017 to 2019, which encouraged a big number of chemical producers and refining/chemical integrated producers to construct acrylonitrile projects and put them into operation. Sierbang’s 260 000 t/a unit was put into production in 2019 and Zhejiang Petrochemical’s 260 000 t/a unit was put into operation in 2020, but the demand growth did not gear up as there were no downstream units on stream in synch. This eased the supply tightness and accordingly the profits shrank sharply. In particular, the start-up of a new 390 000 t/a unit in 2021 hit the acrylonitrile market significantly and some producers were forced to carry out more production cutbacks to ease pressure.

Balanced supply and demand

Figure 1 shows the supply and demand balance of domestic acrylonitrile from 2017 to 2021. According to the figure, the capacity and output of acrylonitrile in China have been growing since 2017, while the dependence on imports has been declining. With the rise of downstream ABS market, the profit of acrylonitrile began to rise sharply. Especially in 2018, the prices of acrylonitrile soared and the profit once reached as high as RMB4 000-5 000/ton due to massive maintenance shutdowns at home and abroad. The lucrative profits trigged sharp capacity expansion. In recent years, the growth rate of domestic demand for acrylonitrile has been much lower than that of capacity, resulting in overcapacity from time to time. Especially in 2020, the global demand for acrylonitrile shrank significantly due to the outbreak of COVID-19. In response, producers had to reduce operating rates for many times to ease the supply pressure. Zhejiang Petrochemical put its 260 000 t/a unit into production in the year, but the output only increased by 2.6% in 2021.

Figure 1 Acrylonitrile supply and demand in China from 2017 to 2021

In 2021, the acrylonitrile market performed well in terms of production capacity, output and apparent consumption. The capacity hit 3.159 million t/a, the output was 2.3178 million tons, and the apparent consumption was 2.3416 million tons. The consumption grew steadily. The growth rate of domestic output was 19.9%, and that of capacity was 16.5%, indicating that both production and capacity performed well during the year. This was because the continuous maintenance and force majeure of foreign units drove domestic producers to increase operating rates to meet domestic demand and export needs as well. The import dependence correspondingly decreased.

Distribution of domestic capacity

At present, the total capacity of acrylonitrile in China is 3.549 million t/a, and the distribution is shown in Figure 2.

Figure 2 Domestic acrylonitrile capacity distribution by region

The acrylonitrile plants were mostly affiliated to Sinopec and PetroChina in previous years. These acrylonitrile plants were well-designed, integrating upstream and downstream units (propylene- acrylonitrile-acrylic fiber, ABS), facilitating the purchase of raw materials, as well as the production and transportation of products.  However, with the rise of refining and chemical integration production mode, there are more and more private acrylonitrile plants. Table 1 shows new acrylonitrile units in China from 2021 to 2022.

High profits of the industry

Figure 3 shows the profit trend of domestic acrylonitrile industry from 2017 to 2022. As shown in the figure, the profits were largely high during the period, but in 2020 and 2022, the profits were in the negative zone because of high feedstock propylene prices and weak downstream demand.

Figure 3 Curve of domestic acrylonitrile profit, from 2017 to 2022

Changes in downstream consumption structure

Figure 4 shows the downstream consumption of acrylonitrile in China from 2017 to 2021. As shown in the figure, acrylonitrile is mainly applied in the fields of acrylic fiber, ABS resin (including SAN resin), acrylamide (including polyacrylamide), nitrile rubber, andfine chemicals. In 2021, the consumption for acrylonitrile from the ABS sector was the highest, accounting for about 50%. The consumption from acrylic fiber decreased from 44% in 2011 to 20% in 2021. There are more and more lower-priced substitutes for acrylic fiber, so the market share of acrylic fiber is decreasing. In addition, the lofty prices of raw material acrylonitrile in recent years have resulted in high production costs and put the acrylic fiber market in the red. In 2021, affected by the control over both the quantity and intensity of energy consumption, some acrylic fiber producers reduced operating rates and hence the output continued to fall. The market performance of acrylamide and polyacrylamide is also not bad. As China has higher and higher requirements on sewage treatment, the demand for polyacrylamide is increasing. The export volume is also increasing rapidly. Nitrile rubber and fine chemicals have been developing well in recent years, especially the nitrile latex market, which reported an increase in the capacity from 1.2 million t/a to 2.2 million t/a during 2021, so the demand for raw material acrylonitrile will also increase.

      Figure 4 Consumption of acrylonitrile by downstream demand in China from              2017 to 2021

Comparative analysis of import and export volume

Figure 5 shows domestic acrylonitrile import volume from 2021 to February 2022. As shown in the figure, the domestic acrylonitrile import volume totaled 25 900 tons during January-February 2022, a significant decrease from the same period of last year. This was mainly because many domestic acrylonitrile units were put into operation to provide ample supply. Downstream producers are attracted to use lower-priced and conveniently-transported domestic goods, so the import volume continues to fall.  

Figure 5 Domestic acrylonitrile imports from 2021 to February 2022

Figure 6 shows China's acrylonitrile export volume from 2021 to February 2022. As shown in the figure, the export volume totaled 21 900 tons from January to February 2022, up by 6.31% from the same period of last year. The acrylonitrile goods are mainly exported to South Korea, India, Turkey and other Asian countries.

Figure 6 Domestic acrylonitrile exports from 2021 to February 2022

ABS will still be the main downstream in the future

ABS, acrylic fiber and acrylamide will remain as the major derivatives of acrylonitrile, but only ABS producers will have a large number of new projects to be on stream, so the proportion of ABS demand will continue to increase. Table 2 shows the new ABS capacity in China from 2022 to 2024. Although it is reported that there will be a new 120 000 t/a nitrile rubber unit to be put into operation, the specific start-up time has not been determined, so it is not included in the item of new capacity. In the meanwhile, there are uncertainties in the acrylic fiber industry. Downstream spinning producers see little improvement as foreign trade orders are still hampered by the lingering epidemic, so the demand for acrylonitrile is expected to remain weak and there will be no new start-up projects in the near term. In general, ABS, acrylic fiber and acrylamide industries will keep developing at a ratio of 5:3:2 in the future.

     Great pressure on the development of acrylonitrile industry in the next three years

     With the continuous start-up of new projects, China's acrylonitrile market will be gradually mature, and the capacity will reach 5.829 million t/a in the coming three years. It is worth noting that the growth of new capacity in these two years will be faster than that of downstream demand. Although the export volume is increasing, the market has been oversupplied, which will cast a shadow on the market. The domestic supply glut will continue in 2022-2023 and it is unlikely to change the structure if only a big number of ABS capacities are put into operation. The acrylonitrile market will evolve from competition for products to competition for both products and integrated industrial chain.