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China’s PO, ACN prices at record high on tight supplies

  • Market: Petrochemicals
  • 18/03/21

Propylene oxide (PO) and acrylonitrile (ACN) prices in China have risen to a record high on continued supply shortages globally amid plant shutdowns in Europe and the US.

Domestic delivered prices for PO in east China are at 19,500-19,900 yuan/t ($3,000-3,060/t), according to Argus' latest assessment, up by Yn3,000/t or 18pc from around a month ago before the mid-February lunar new year holiday and the highest level since data became available in November 2014. China has been exporting PO to destinations such as India and Europe, following huge production losses in the US because of freezing weather and plant turnarounds in the Middle East. Most sellers have sold out their supplies, while some have limited material to offer, underscoring the firm market sentiment in China.

Supplies in China are limited. State-controlled Sinopec's 100,000 t/yr PO unit at its 230,000 b/d Changling refinery has been undergoing a turnaround since 18 February and is expected to return by early April. Petrochemical producer Shandong Shida Shenghua Chemical's 70,000 t/yr PO plant went off line for a 10-day maintenance on 15 March. Fellow producer Shandong Zhonghai will shut its 62,000 t/yr PO line on 19 March for 15 days. The plant is preparing for the shutdown and running at around 70pc capacity. These have driven up production margins for non-integrated PO producers in China to a three-month high of Yn9,560/t this week, up by Yn1,710/t or 22pc from a month ago, according to Argus' calculations.

ACN prices in the cfr China market have also hit at an all-time high because of supply shortages globally in the face of plant closures in the US and Europe. Argus' latest assessment of ACN prices on a cfr China basis is $2,900-3,000/t, up by $350/t or 33pc from just two weeks ago and the highest since records began in January 2000. The last time ACN prices were close to this level was around May 2011 when prices settled at $2,800/t cfr China.

Domestic prices in the east China region are also at a 2½-year high of Yn16,500-16,800/t ex-tank in line with the rise in cfr China prices. Some producers are postponing their turnarounds to take advantage of profitable production margins amid robust demand. State-controlled PetroChina affiliate Fushun Petrochemical's 92,000 t/yr ACN unit was supposed to undergo a planned 45-day turnaround in April, but this has been delayed until further notice. Petrochemical producer Shanghai Secco may also delay an April turnaround at one of its 260,000 t/yr plants, although the exact dates are unclear.

Chinese producers are running their ACN plants at high rates in response to the record-high ACN prices this week. Average operating rates rose to 94pc, up by 4pc from two weeks ago and the highest level since 2016. Non-integrated ACN margins at Chinese producers have breached the $1,000/t mark to settle at $1,315/t, the highest level since records began in 2012, according to Argus' calculations.

But market participants expect prices to weaken slightly in the coming weeks on increased supplies.

For PO, additional capacity will be coming on line in China by the end of March. State-controlled Sinochem subsidiary Sinochem Quanzhou's new 200,000 t/yr PO plant is expected to start up by this week, while petrochemical producer Jinling Huai'an Salt Chemical's new 200,000 t/yr PO unit will come on line by the end of March, providing some relief to the undersupplied situation.

For ACN, petrochemical producer Shandong Haili restarted its 130,000 t/yr unit on 12 March and produced on-specification ACN this week. The producer had idled the plant since July 2020 because of weak margins but resumed production this week to take advantage of the robust ACN demand. Supplies from the US and Europe are expected to return from April onwards, which will lengthen the supply balance further.

PO non-integrated margins Yn/t

ACN non-integrated margins $/t

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