China acetic acid seen stable-to-firm on tight supply

16 November 2017 05:57 Source:ICIS News

SINGAPORE (ICIS)--China’s acetic acid prices are expected to be on a stable-to-firm trend for the rest of the month, backed by tight availability of spot domestic cargoes amid strong demand.

At the close of trade on 15 November, spot prices in east China were assessed at Chinese yuan (CNY) 3,800/tonne ex-tank ($574/tonne), up by CNY75/tonne or 2% from 10 November, according to ICIS data.

Prices in the domestic market have rebounded this week, after falling by around CNY275/tonne over a three-week period from late October as sellers had high inventories.

In the next two months, acetic acid producers in northern China may have to cut output due to insufficient supply of feedstocks methanol and carbon monoxide.

The region has Tianjin Soda’s 250,000 tonne/year unit; Kingboard Chemical’s 500,000 tonne/year unit; Shandong Hualu-Hengsheng Chemical’s 600,000 tonne/year unit and Yankuang Group’s 1m tonne/year plant.

The Chinese government has ordered these producers to scale down production at their integrated coking plants to address the usual spike in pollution levels in northern China during winter.

Meanwhile, Celanese’s 1.2m tonne/year acetic acid plant at Nanjing in the eastern Jiangsu province will remain off line for maintenance until 24 November, with no spot cargoes available for sale.

The company has had to tap the spot market to ensure adequate acetic acid supply to its contractual customers, further tightening spot availability in eastern China, market sources said.

In the export market, China has also been boosting its shipments of the material for months to cover the shortfall of US cargoes flowing into the European markets.

US supply was further disrupted following an explosion on 4 October at the US-based acetyls producer Eastman Chemical’s complex in Kingsport, Tennessee. The complex has 255,000 tonnes/year of acetic acid capacity.

Chinese producers showed a stronger interest to export cargoes in view of good margins, with increased volumes scheduled for late November/December-loading heard sold overseas.

In the third quarter, China’s overall acetic acid exports stood at 175,900 tonnes, more than triple the volume shipped out in the same period last year, according to China Customs data.

On the demand side, robust downstream markets are expected to provide support to domestic acetic acid prices.

Consumption is expected to increase by around 15,000 tonnes per month once the purified terephthalic acid (PTA) start-ups in the country are running at full capacity.

Jiaxing Petrochemical is scheduled to bring on stream a 2.2m tonne/year PTA unit at Jiaxing, Zhejiang province this month; while Xianglu Petrochemical commenced production at two lines with a combined 3m tonne/year capacity in early November, industry sources said.

Moreover, a number of ethyl acetate (etac) producers planned to scale up production as prices of the product rebounded this week, supported by higher feedstock values.

Prices of vinyl acetate, another downstream product of acetic acid, were also on the rise in east China since early November.

However, some traders and downstream users expected prices to retreat in end-November or early next month, citing increased supply after Celanese wrapped up maintenance and tepid demand.

December is a traditional demand lull season for the acetic acid market in China.

Focus article by Anna Xiang

($1 = CNY6.62)

Picture: Cans of paint. Acetic acid is used as an intermediate in a wide range of products including fibres, paints, adhesives, pharmaceuticals and printing inks. (Source: imageBROKER/REX/Shutterstock)

ICN

By Anna Xiang