Core viewpoint: The rise in the acrylic acid market this round is not simply due to financial speculation, but is supported by solid fundamentals, including rising costs, shrinking supply, and internal transmission of essential needs in the industry chain, which collectively drive the low-level rebound. However, the weak terminal demand has led to a ceiling on the market height.
1、 The benchmark price of acrylic acid increased from 7983.33 yuan/ton at the beginning of the week to 8050.00 yuan/ton, with a week on week increase of 0.84%. The upstream raw material propylene has seen a significant increase, with a benchmark price of 8954.33 yuan/ton on August 23, up 12.95% from the beginning of this month. The increase in raw material prices is significantly higher than that of finished products, indicating a typical cost driven market trend.
2、 Fundamentals
1. Cost side: Raw material propylene has seen a significant increase, forming the underlying support for the market
Propylene is the most essential raw material for acrylic acid, accounting for over 60% of the total production cost. This month, propylene has significantly increased due to energy and equipment disturbances, directly raising the production cost of acrylic acid. Enterprises passively raised their quotations to hedge against raw material costs, resulting in a slower increase in finished product prices compared to raw material prices, and the industry’s processing profits were restored.
2. Supply side: Device maintenance, substantial tightening of spot goods supply
Domestic acrylic acid and related ester facilities have entered a maintenance cycle, causing a decline in industry production and social inventory falling to a low level for the year. The proportion of factory contract orders is relatively high, leading to a contraction of spot resources flowing into the circulation market, coupled with an increase in export orders, further digesting domestic inventory. Manufacturers’ spot prices are based on the reality of tight supply, and are not artificially inflated by hoarding.
3. Directly following up on downstream urgent needs, forming transmission within the industry chain
The factories of butyl acrylate, ethyl ester, and isooctyl ester urgently need to purchase goods, while downstream ester enterprises maintain production, resulting in a real demand for acrylic acid procurement and driving a surge in spot transactions. This is also a necessary condition for the price of acrylic acid to be implemented.
But it needs to be distinguished: there is a strong demand directly downstream, while the downstream of the terminal is relatively weak. The end industries of coatings, lotion and adhesives are still in the traditional off-season, and only just need to purchase, without large-scale hoarding. The concentrated market contradictions are reflected in the smooth transmission of intermediates and the weak acceptance of terminals.
3、 Market constraints
Although the fundamentals support this round of rebound, there are also practical constraints to curb unilateral surges:
1. The terminal demand is in the traditional slack season. The downstream paint lotion enterprises only accept the cost transmission, and are unable to actively promote the purchase of raw materials. The terminal bears the upper limit, which determines that the upward space of acrylic acid and esters is limited;
2. The medium and long-term moving averages of the 20th and 30th have not turned around, and the technical level is only a rebound;
3. The resumption of production of maintenance equipment in the later stage and the release of supply increment will suppress the market.
4、 Market analysis and judgment
In the short term, supported by the common fundamentals of propylene cost, low inventory, and downstream ester demand, acrylic acid, butyl ester, ethyl ester, and isooctyl ester will maintain strong oscillation. The market foundation comes from real costs and supply and demand, and there is no condition for funds to deviate from fundamental speculation.
In the medium to long term, the sustainability of the market depends on two fundamental variables: one is whether the propylene raw material can maintain a high level; The second is the game between supply increment and terminal demand after the maintenance equipment resumes production. Once costs loosen or supply is released in large quantities, there is a risk of a pullback in this rebound market.
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