Overview - In 2024, China's acrylonitrile production capacity is projected to be 4.399 million tons, remaining stable compared to 2023, while production is expected to reach 3.113 million tons, reflecting a year-on-year growth of 6.56% [2] - The capacity utilization rate has been declining since 2020, with a forecasted recovery to 70.8% in 2024. The rapid expansion of domestic acrylonitrile supply is leading to an increase in industry supply, while demand in key downstream products such as ABS, acrylic fiber, and acrylamide remains weak. The apparent consumption of acrylonitrile in China is expected to be 2.946 million tons in 2024, with a growth rate of only 0.08%, indicating a potential oversupply situation [2] Market Policies - Recent policies in China aim to promote high-quality development in the petrochemical industry, including guidance on technological innovation and industrial upgrades for acrylonitrile companies. These policies support the industry's transition towards high-end and green development [7][9] Industry Chain - The acrylonitrile industry chain consists of upstream suppliers of raw materials such as propylene, liquid ammonia, and catalysts, the midstream production segment, and downstream applications including ABS, acrylic fiber, acrylamide, nitrile latex, nitrile rubber, polymer polyols, and carbon fiber [10][11] Consumption Structure - The consumption of acrylonitrile is primarily concentrated in three sectors: ABS, acrylic fiber, and acrylamide, with ABS accounting for the largest market share at 50%. The major consumption area for ABS is the electrical manufacturing industry, which is expected to represent over 70% of China's total ABS consumption in 2024, with household appliances being the largest segment [12]

Core Viewpoint - The domestic acrylonitrile industry is entering a new phase of capacity expansion, with significant concerns about supply-demand imbalance due to the projected increase in production capacity by over 1.3 million tons by 2025, potentially leading to a deep adjustment in the industry [1][2]. Capacity Expansion - In 2025, China's acrylonitrile industry is expected to undergo a concentrated expansion, with a total capacity increase of nearly 25% compared to the end of 2024, following the commissioning of several new facilities [2]. - The first expansion phase occurred from 2020 to 2023, where total capacity rose from 2.597 million tons to 4.399 million tons [2]. - The number of acrylonitrile producers is projected to increase from 16 to 20, leading to a decrease in the market concentration of the top five companies from 63.47% in 2024 to 55.91% in 2025, marking a five-year low [2]. Demand Saturation - The demand for acrylonitrile's three main downstream products is currently saturated, limiting the upward pull on upstream raw materials [3][4]. - ABS resin, which accounts for 50% of acrylonitrile consumption, has seen its production capacity grow rapidly, yet the industry average profit has plummeted to -253 yuan/ton in 2024, a year-on-year decline of 220.3% [3]. - The acrylic fiber sector is also facing demand pressures, with weaving enterprises operating at below 60% capacity and a 30% year-on-year decrease in overseas orders [4]. Future Opportunities - The acrylonitrile industry may find growth opportunities in high-end applications such as carbon fiber and high-performance engineering plastics, with an expected annual demand growth of 8% to 12% from 2025 to 2030 [5][6]. - The carbon fiber industry is expanding rapidly, with production increasing from 18,700 tons in 2020 to 59,000 tons in 2024, reflecting a compound annual growth rate of 33.28% [5]. - As new technologies and cost optimizations emerge, the carbon fiber sector is anticipated to create significant new demand for acrylonitrile, potentially leading to a market value exceeding 100 billion yuan [6]. Competitive Landscape - The acrylonitrile industry is experiencing intensified competition, making cost control crucial for survival [6]. - Companies with proprietary technologies can reduce production costs and meet high-end downstream demands, positioning themselves advantageously in the market [6].

Core Viewpoint - The acrylonitrile industry is facing a new round of capacity expansion and demand shrinkage, leading to a potential mismatch in supply and demand dynamics. Group 1: Supply Dynamics - The domestic acrylonitrile industry is expected to see a significant increase in capacity, with over 1 million tons of new capacity projected for 2025 after a period of no new capacity additions in 2024 [1] - New production lines have already been launched, including a 130,000 tons/year line by Yulong Petrochemical in March and a new facility by Sinochem in Quanzhou in April, contributing to a total of 590,000 tons/year of new capacity in the first half of the year, representing a 13.41% increase compared to the end of 2024 [1] - If all planned facilities come online as scheduled, the total national acrylonitrile capacity could reach approximately 5.71 million tons/year, marking a 30% increase [1] Group 2: Demand Challenges - The downstream operating rates remain low, contrasting sharply with the significant increase in acrylonitrile capacity, particularly in the ABS industry, which has released 1.4 million tons/year of new capacity but is primarily focused on standard materials [2] - The textile industry, a key downstream sector, is experiencing a downturn, with operating rates falling below 60% and overseas orders decreasing by 30% year-on-year, leading to production cuts exceeding 2 million tons/year [2] - The demand for acrylamide is also weak due to global economic sluggishness, with limited growth in traditional sectors and insufficient demand in emerging areas, despite some support from "dual carbon" and environmental policies [2] Group 3: Price and Market Outlook - The price of acrylonitrile has been under pressure, with an average price decline of 5.19% year-on-year, remaining at mid-low levels compared to the past five years [3] - Despite initial theoretical profitability exceeding 1,500 yuan/ton at the beginning of the year, the market quickly returned to a loss state due to the rapid release of capacity [3] - Overall demand growth is expected to be limited, with the ABS sector's new capacity likely contributing less than 200,000 tons to acrylonitrile consumption, and the supply growth rate anticipated to outpace demand growth, maintaining a surplus situation in the market [3]

Core Viewpoint - The rapid growth of China's acrylonitrile industry is driven by both state-owned enterprises and private companies, with production capacity expected to continue expanding in 2024 due to upstream raw material growth and downstream demand [2]. Industry Capacity Growth - China's acrylonitrile production capacity increased from 2.355 million tons in 2019 to 4.399 million tons in 2023, with a projected capacity of approximately 4.839 million tons in 2024, representing a year-on-year increase of 10% [2]. Industry Definition and Classification - Acrylonitrile, with the chemical formula C3H3N, is a colorless liquid with a pungent odor, used primarily in the production of polyacrylonitrile fibers, ABS resin, and nitrile rubber [4]. Regulatory Framework - The main regulatory bodies for the acrylonitrile industry include the National Development and Reform Commission and the Ministry of Industry and Information Technology, which oversee policy formulation and implementation [6]. Industry Policies - Recent government policies aim to promote the development of the acrylonitrile industry, including the "Guiding Opinions on Promoting Green Innovation and High-Quality Development in the Refining Industry" released in October 2023, which encourages product structure adjustments and production technology upgrades [7][8]. Industry Barriers - The acrylonitrile industry faces several barriers, including: - **Technical Barriers**: The production process requires advanced technology and expertise, making it challenging for new entrants [10]. - **Market Barriers**: Established companies dominate the market, creating a competitive landscape that is difficult for newcomers to penetrate [11]. - **Financial Barriers**: High initial investment costs for production facilities and technology pose significant challenges for new entrants [12]. Industry Chain Analysis - The acrylonitrile industry chain consists of upstream raw materials (liquid ammonia, acetonitrile, propylene), midstream production, and downstream applications, with ABS becoming the largest demand sector due to growth in the automotive and home appliance industries [13].