Acetic acid prices rise and thicken related company performance

Affected by the shutdown of the main equipment, the price of acetic acid has continued to rise since the second quarter. The recent strong acetic acid prices, coupled with the low methanol content of raw materials, acetic acid industry to obtain greater profit margins. Analysts believe that the overall supply of acetic acid is in short supply, and the current high price is expected to be maintained in August.

Acetic acid is in short supply

It is understood that the acetic acid industry continued to be sluggish, and after years of adjustment, the effectiveness of the industry in this year has been reflected. In addition, the main acetic acid enterprises such as Jiangsu Thorpe [1.80% Funds Research Report] (600746) and Shanghai Wusong Chemical Co., Ltd. were overhauled and stopped in the second quarter, and the industry was in short supply. The shortage of supply in the market pushed acetic acid from 3,087 yuan/ton in early April to 3,932 yuan/ton or more, an increase of 27%.

Device failure affected the overall operating rate of the acetic acid industry in the second quarter. From the aspect of acetic acid supply, acetic acid production enterprises have experienced frequent equipment failure since May. According to Zhang Guang, an analyst at Business Club, from the end of March to early June, the industry operating rate is about 40%. The domestic acetic acid giant Nanjing Yangzi Petrochemical and Shandong Yantai Cathay Pacific respectively recently stopped for 15 days, further boosting the acetic acid rally. Business club data show that the average price of acetic acid in the market last week was 3841 yuan / ton, last Friday was 3925 yuan / ton, a week's rise of 2.18%.

This reporter learned that as of the end of last week, Nanjing Yangzi Petrochemical 500,000 tons/year acetic acid plant is still in the parking, and Yantai Guotai related equipment began to restart last week, but the current production is still unstable.

"We all say that there is an excess capacity of acetic acid, but the actual start-up situation of the manufacturers is not optimistic." Zhang Guang said that because acetic acid is corrosive, it is easy to cause damage to the device, so regular inspections are necessary, sometimes due to device components Damage caused by accidental overhaul. At present, the national acetic acid production capacity is relatively concentrated, and the number of manufacturers is more than a dozen. As long as one device is overhauled, the supply will be tight, which will affect the market price.

Low raw materials

In stark contrast to the booming trend of acetic acid, the raw material methanol trend is sluggish. Due to oversupply, the domestic methanol market price has fallen by more than 22% this year. The current price is RMB 2,430/t.

Analysts believe that the prices of raw materials, methanol and acetic acid, go against each other in the first half of the year. This is mainly due to the maintenance of acetic acid plants and the shortage of supplies. In this case, the price of acetic acid is not affected by the cost.

Hua Lu Hengsheng [1.95% Capital Research Report] (600426) has an annual production capacity of 500,000 tons of acetic acid. Benefiting from the lower cost of acetic acid and the increase in production and sales volume, Hualu Hengsheng initially expects its first-half performance to increase by 80% to 120% over the previous year, exceeding market expectations. Hua Lu Hengsheng said that the company grasped changes in market prices in its operations, optimized its product structure, and improved its profitability.

Great Wall Securities believes that the rise in acetic acid prices, the drop in raw material prices, the gross profit margin of acetic acid business and the overall improvement in profitability are the main reasons why Hualu Hengsheng’s performance exceeded expectations.