The Status-quo and Outlook of China's ACN Market

Transcription

1 The Status-quo and Outlook of China's ACN Market Sun Min Senior Analyst China Chemical & Fiber Economic Information Network (CCFEI)

2 The Status-quo and Outlook of China's ACN Market SUN Min CCFEI Analyst Shanghai, China March 9, 212 Outline I. China ACN Market Review, Current Supply & Demand, and Future Development II. China AF Market Review, Current Supply & Demand, and Future Development III. ACN Chain Development Outlook 21

3 I. China ACN Market Review, Current Supply & Demand, and Future Development Review of China's Domestic ACN Market in 211 The Status-quo of Supply & Demand in China's ACN Market Future Trend and Outlook on ACN Market Review of China's Domestic ACN Market in 211 A deep dive with negative margins: In early November 211, ACN price hit a year-low 1,9 yuan/ton. At that time, ACN cost (=1.1 propylene price+.5 ammonia price+processing cost) was assessed at 13,4 yuan/ton, a premium to ACN price of 2,5 yuan/ton. A bullish rise with margin regains: In late February 212, ACN price surged to 17,8 yuan/ton, while ACN cost was at 13,5 yuan/ton, which put ACN cash flow at nearly 4,5 yuan/ton. Source: CCFEI price index 22

4 ACN Supply Home-made material ACN Supply in China Imported ACN 1. China's ACN Capacity kt/yr Shanghai Secco Jilin PC Shanghai PC Anqing PC Qilu PC Fushun PC Daqing PC Daqing RC Lanzhou PC Original Capacity Added in 21 Added in 211 (To be) Added in 212 Note: PC=Petrochemical; RC=Refining & Chemicals 23

5 2. ACN New Capacities & Expansions in Country New/Expansion project Capacity Total capacity Location Start-up time Qilu PC ACN expansion 4 8 Zibo, Shandong Jun. 211 Anqing PC expansion Anqing, Anhui H2 212 Secco expansion Caojing, Shanghai Est. 213 China Shanghai PC expansion Jinshan, Shanghai After 213 CNOOC ACN project 2 2 Hainan 215 Shandong Wanda ACN project (joint venture) Dongying, Shandong 1st phase, 213 CPDC expansion 7 24 Taiwan Oct. 211 Thailand PTT Asahi Chemical 2 2 Thailand Nov. 211 South Korea Tongsuh PC expansion Ulsan, Korea End 212 Saudi Arabia New capacity 2 2 Saudi Arabia ACN Production in China kt % 3.% 25.% 2.% 15.% 1.% 5.%.% -5.% -1.% Production Growth rate 24

6 4. ACN Import in China ACN Import in China in , 21.51% 541,665 5, 4, 3, 445, estimate: 45±3 kt 2, 1, ton Origin of China's ACN Imports in ton 35.% 31.72% 3.% 24.99% 25.% 22.14% 2.% 14.46% 15.% 1.% 4.32% 5.% 1.37% 1.%.% Russia South Korea USA Brazil Japan Taiwan Others Import volume Share The US, South Korea and Japan rank the top three origins of Chinese mainlaind ACN imports, with their respective shares at 31.72%, 24.99% and 22.14%. The 4th and 5th are Chinese Taiwan (14.46%) and Mexico (1.73%). Chinese mainland also imports ACN from the Russia, Brazil and the Netherlands, etc. 25

7 6. ACN Consumption in China in % 2.% 1.%.% -1.% -2.% kt % Apparent consumption Growth rate ACN Demand Demand from Acrylic Fiber Demand from ABS ACN Demand Demand from PAM/AM 26

8 1. Distribution and Development of ACN Demand in China ACN Demand in 211 Unit: kt 211 AF ABS PAM/AM Others Capacity 755 2,74 7 Output Operating rate 7 93% 1,56 57% % 154 ACN demand Development of ACN Derivatives ABS New Capacities or Expansions in China New projects Capacity Location /Expansions (kt/yr) Zhenjiang Chimei (expansion) Zhenjiang Chimei (new project) LG Chemical (expansion) LG Chemical (Huizhou) Tianjin Dagu (2nd phase) Jilin PC (expansion) FCFC (expansion) Shinho PC (expansion) Shanghai Huayi Zhejiang, Jiangsu Meizhou Bay Petrochemical Base Ningbo Guangdong Tianjin Jilin Ningbo Changzhou, Jiangsu Shanghai Start-up time Early Early 212 Before 213 H2 212 Aug. 212 H2 212 Planning 2nd phase in

9 2. Development of ACN Derivatives PAM/AM New Capacities or Expansions in China Producer Capacity in 211 (kt/yr) New projects/expansions Jiangxi Changjiu Nongke Chemical Industry Company Zibo Mingxin Chemical Zhejiang Xinyong Biochemical Hangzhou Bay Acrylic Fiber 6 (AM) Plans to build 2 kt/yr unit in Jiangsu in 212 Expanded to 4 kt/yr by July 211 Expanded to 4 kt/yr in 211 New 2 kt/yr AM unit started up in Distribution and Development of ACN Demand in China ACN Demand in 21 (by derivative) ACN Demand in 211 (by derivative) 21% 9% 38% AF ABS 23% 1% 42% AF ABS 32% PAM/AM Others 25% PAM/AM Others In 211, AF remained the absolute major consumer of ACN. However, with ABS capacity expansion but little AF capacity to be added, ACN demand from AF and ABS will be similar by 213, with respective shares assessed at 35% and 32%. Gradually, ABS will replace AF as the dominant area of ACN consumption. 23% ACN Demand in 213 (by derivative) AF 1% 35% ABS PAM/AM Others 32% 28

10 ACN Market Review and Outlook 1. China domestic ACN market hit a year-low and then rebounded in Q3-Q Stepping into 212, sentiment boomed on healthy S/D fundamentals, especially after the Lunar New Year due to tightened supply in line with busy turnarounds at both home and abroad. With the T/A season to end in March, supply is expected to ease in April, capping further price rises, yet there is no downward pressure for the present. 2. In Q1 212, ACN prices surged on sustained upward momentum, leading to the recovery of industry economics. In Q2, sentiment is likely to range bound, with possible weakness, as supply is about to increase but demand looks sluggish. Q3 may expect a downtrend on supply overhang, with the startup of some new units. 3. In , ACN capacity will continue its fast expansion. China s ACN output in 212 is estimated to reach 1.2 million tons, while import may fall to 45kt, putting selfdependency rate higher at 72%. 4. In , the growth of AF market will be slow, while that of ABS and PAM/AM seems healthy, which means greater demand for ACN. After 213, ACN demand from ABS sector will very likely replace that from AF as the highest of all derivatives. II. China AF Market Review, Current Supply & Demand, and Future Development Review of China s Domestic Acrylic Fiber Market in 211 Acrylic Fiber Capacity & Production: Present and Future Outlook on Acrylic Fiber Market 29

11 Review of China's Acrylic Fiber Market in 211 To the bottom on bearish expectations fueled by feedstock slump Cost-driven rebound Downslide amid less external support and offseason demand Profit Margins of Acrylic Fiber Producers in China Y/T 4Jan 4Feb 4Mar 4Apr 4May 4Jun 4Jul 4Aug 4Sep 4Oct 4Nov 4Dec 4Jan 4Feb Gross margins ACN Acrylic staple Y/T After returning from the Lunar New Year holiday, ACN market continued its preholiday strength, so AF offers followed up on persistent cost support, but the gains lagged behind those of ACN. By mid-february, negative margins were heard from AF producers, who may become discouraged from running rates in future. 21

12 Acrylic Fiber Capacity in China Country Producer Location Capacity (kt/yr) Shanghai Petrochemical Shanghai 15 Anqing Petrochemical Anqing, Anhui 7 Qilu Petrochemical Zibo, Shandong 6 Daqing Petrochemical Daqing, Heilongjiang 65 China Fushun Petrochemical Fushun, Liaoning 55 Jilin Qifeng Jilin City 14 Jilin Jimeng Jilin City 1 Hangzhou Bay Ningbo, Zhejiang 6 Ningbo Zhongxin Ningbo, Zhejiang 55 Distribution of Acrylic Fiber Capacity in China Shanghai PC 8% 7% 2% Anqing PC Qilu PC 13% 9% Daqing PC Fushun PC Jilin Qifeng 19% 7% 9% 8% Jilin JiMont Hangzhou Bay Ningbo Zhongxin 211

13 Acrylic Fiber Capacity Development in China kt/yr * 213* Capacity Growth rate 1.% 5.%.% -5.% -1.% -15.% -2.% Acrylic Fiber Production in China China's AF Capacity and Production in % 8% 6% 4% 2% kt * 213* % Capacity Production Cap. Utilization After the elimination or permament shutdown of some plants, AF supply will remain healthy. It is predicted that after 212, run rates of AF industry will be steady at 9% or above, along with a yearly output of around 7 kt. Before 213, there will be no significant change in its demand for ACN, which is estimated at around kt per year. 212

14 Acrylic Fiber Import & Export in China ton 5, 45, 4, 35, 3, 25, 2, 15, 1, 5, Acrylic Fiber Import in China in In 211, China's acrylic fiber import reached 195,292 tons, down by a mere.58% from 196,425 tons in 21. Prior to December 211, AF prices dipped sharply, which boosted buyers' restocking interest and thus led to an increase in import volume. Origin of China's Acrylic Fiber Imports ton Origin of China's AF Imports in % 4.9% Import volume Share 4.% 35.% 3.% 25.% 2.% 16.66% 15.% 12.2% 12.7% 1.% 7.9% 8.44% 5.% 1.38%.% Japan Taiwan S. Korea Thailand Turkey Belarus Others According to China Customs statistics, China mainland mainly imports AF from Japan, Chinese Taiwan and South Korea, with imports from Turkey, Mexico and Belarus accounting for smaller proportions. 213

15 China's Acrylic Fiber Export ton 12 Acrylic Fiber Export in China in China's AF exports are much smaller than imports. As China mainly produces low-end regular acrylic fibers, the demand from developed countries is limited, and the products are mainly exported to Middle East, Southeast Asia, etc. In 211, China exported 4,53 tons of AF, down by 359 tons or 8.14% on year. Apparent Consumption of Acrylic Fiber in China Year Production (kt) Import (kt) Export (kt) Apparent consumpti on (kt) Selfdependenc y (%) , , , , ,

16 Acrylic Fiber Market Review and Outlook 1. After 212 Lunar New Year, acrylic fiber firmed up on feedstock strength, yet its gains lagged behind those of ACN, so producers still suffered negative margins. In the near future, cost support will persist for acrylic fiber, yet price hikes will be capped by limited downstream acceptance. 2. It is predicted that producers will continue to see low stocks on healthy sales in the first quarter, and the prices will remain firm on rising feedstock cost. However, the market will eventually flatten off in March due to growing resistance after the prices hit a high level. Entering the second quarter, producers will see mounting inventory on slower trade as prices stabilize, and they may cut runs to prevent prices from falling. When feedstock cost falls and downstream demand crimples in the third quarter, acrylic fiber market will start to show signs of weakness. 3. China's acrylic fiber capacity will be stable, with few new units to be added. Meanwhile, China will remain highly dependent on imports, given the existing gap between itself and developed countries in terms of high-end acrylic fiber. 4. Demand for acrylic fiber will see little change. Although it only accounts for a small share in the fast growing chemical fiber market, its featured applications are able to guarantee stable rigid demand. In future, the production of and demand for acrylic fiber will both remain steady. III. ACN Chain Development Outlook ACN capacity will see persistently healthy growth at an average annual rate of 5-15% in The capacity is expected to exceed 1.8 million t/a by 214, with participation of non fully state-owned parties such as joint ventures. With increasing competition between home-made products and imports, the time span of ACN arbitrage opportunities will grow shorter, leaving less space for trade. However, increased supply will help maintain price steadiness, which is beneficial to the development of downstream sectors. ACN demand pattern will gradually evolve, with the proportion of acrylic fiberoriented decreasing and that from ABS and PAM/AM sectors increasing. Accordingly, influences on ACN market will change somewhat. China s acrylic fiber capacity (mainly of low-end regular products) will largely remain stable, having reached supply-demand balance. In the meantime, more efforts will made on capacity upgrading, as China moves on to develop new and high-end acrylic fibers. Nevertheless, such breakthrough will take quite a while. 215

17 Thank you! 216