China’s butyl acrylate prices to rise on peak turnarounds

Source: ICIS News

2019/02/11

SINGAPORE (ICIS)--China’s domestic butyl acrylate market is heading for a price hike following the Lunar New Year holidays, amid a milieu of plant maintenance works.

(Source: Bernard Jaubert/imageBROKER/REX/Shutterstock)

A phalanx of producers in China as well as in other parts of Asia, will take their butyl acrylate units offline in the first quarter.

Prices would firm up, also likely stoked by expectations of buyers replenishing their inventory after the holidays.

Delivery prices in east China averaged at yuan (CNY) 9,950/tonne on 3 February, up by CNY400/tonne or 4% higher compared with levels on  2 January, ICIS data showed.

Meanwhile, a litany of turnarounds combined with run cuts would lead to a domestic supply cut of nearly 40,000 tonnes in the first quarter, fueling a bullish outlook in the market; bets are on a seller's market with producers calling the shots.

   Planned turnarounds at domestic butyl acrylate units in Q1

Producer Location Capacity (‘000 tonnes/year) Shutdown Restart
Lanzhou Petrochemical Gansu, northwest China 80 22 November 2018 25 January 2019
Shandong Kaitai Shandong, north China 80 16 January 2019 31 January 2019
Zhejiang Satellite Zhejiang, east China 160 23 January 2019 31 January 2019
Wanchio Petrochemical Jiangsu Jiangsu, east China 80 30 January 2019 1 March 2019
Jiangsu Sanmu Jiangsu, east China 60 Late January Mid-February 2019
CNOOC Huizhou Refinery Guangdong, south China 100 22 February 2019 3 April 2019
Shenyang Paraffin Chemical Liaoning, northeast China 80 Mid-March 2019 Late March 2019

Source: ICIS

In addition, some domestic butyl acrylate producers have lowered their run rates.

Ningbo Formosa has two 120,000 tonne/year butyl acrylate units, but only one is in operation and is running at 70-80% of capacity.

Moreover, Ningbo Formosa plans to shut its 160,000 tonne/year acrylic acid unit for about 15 days of maintenance from 20 February 2019 when its butyl acrylate production will be affected.

Outside China, units are also scheduled for maintenance in other parts of the region.

According to ICIS data, Formosa Plastics’ 80,000 tonne/year butyl acrylate unit in Mailiao will be shut in February for one month of maintenance.

Another major supplier in southeast Asia is expected to undergo annual maintenance during March-April, and its butyl acrylate unit has a capacity of 100,000 tonnes/year.

That said, amid growing capacities and production in China, the supply shortage stemming from the maintenance at other Asian units will bring more export opportunities to China’s butyl acrylate producers.

In addition, downstream emulsion and adhesive tape producers will resume production after the Lunar New Year next week, sparking off demand for butyl acrylate and hence likely bolstering prices.

Over the past five years, butyl acrylate prices in China broadly edged up after the Lunar New Year holidays.

Graph: Butyl acrylate prices in east China within 30 days after the China Lunar New Year holiday (2014-2018)

Prices respectively enjoyed a rise of 14%, 15% and 9% after the Lunar New Year holiday in 2015, 2016 and 2018, while prices in 2014 and 2017 respectively fell by 4% and 8%.

Given that butyl acrylate prices hovered at the cost line in late 2018,  prices could rise significantly since demand is expected to outpace supply after the holidays.

However, some market participants are of the view that any price increases may not be too egregious and a supply crunch would not occur because of the completion of a few turnarounds.

Lanzhou Petrochemical  restarted its 80,000 tonne/year unit in late January, while Shandong Kaitai will bring its 80,000 tonne/year unit online in early February.

Jiangsu Sanmu’s new 120,000 tonne/year unit has been in normal operation, and some east China-based producers who are running at reduced rates will recover normal production successively.

In addition, whether Wanhua Chemical will put its third 120,000 tonne/year unit into production or not could impact the market.

Butyl acrylate is mainly used to make acrylic polymers. It is used in formulating paints and dispersions for paints, inks, and adhesives.

Other uses include cleaning products, antioxidant agents, amphoteric surfactants, aqueous resins and dispersions for textiles and papers.

Focus article by Sikee Shi 

Additional reporting by Li Li Chng