SINGAPORE (ICIS)--China’s domestic acetic acid prices are likely to rebound after an upcoming week-long holiday with stable supply but larger downstream demand to replenish depleted stocks.
Acetic acid prices in China have taken a downtrend since late January, partly weighed by a softening feedstock methanol market.
At the close of trade on 13 February, spot prices of acetic acid were assessed at yuan (CNY) 4,350-4,800/tonne in east China, down by CNY375/tonne or 7.6% from 29 January, according to ICIS data.
Ex-tank prices of feedstock methanol in the region, meanwhile, shed about CNY580/tonne or 15.5% since mid-January, the data showed.
Most acetic acid plants will be in normal operation during the holiday, with two unit restarts pending in the period.
BP YPC Acetyls Company (BYACO)’s 500,000 tonne/year unit at Nanjing has been taken off line since 8 February as its carbon monoxide supplier was facing mechanical issues.
Shanghai Wujing Chemical shut its 450,000 tonne/year No 2 plant in Shanghai on 6 February due to technical glitches.
As of 13 February, average operating rate at domestic acetic acid producers stood at around 75%, according to data compiled by ICIS.
Downstream purified terephthalic acid (PTA) producers will be running their plants normally during the holiday, while most acetic esters factories will be closed for maintenance.
The consumption loss from acetic esters production is likely to be off set by increased export volumes in February.
China is expected to ship around 50,000 tonnes of acetic acid overseas this month, up from over 40,000 tonnes in January, according to market sources.
Celanese raised exports from its 1.2m tonne/year acetic acid units at Nanjing, China, to south Asian customers following an unplanned outage at its 600,000 tonne/year unit in Singapore during late January-early February.
Looking into the post-holiday period, domestic prices of acetic acid may rebound on the back of a traditional uptick in replenishing demand with the restarts of acetic esters plants.
Meanwhile, India may need more volumes from China to cover the shortfall in US cargoes during March, as plant operations in the US were heard to be disrupted by low temperatures, Chinese exporters said.
Lower domestic spot availability amid a slew of unit turnarounds in the next two months may also add upward momentum on prices.
However, the recent slumps in crude values and poor stock market performance may to some extent weigh on acetic acid prices.
China will celebrate its Lunar New Year on 15-21 February.
Focus article by Anna Xiang