July China MA Profits Declined Y-O-Y

According to SCI’s statistics, the profits of MA (maleic anhydride) units remained fairish in July 2018. As the n-butane prices kept rising, the profits of MA units obviously declined year-on-year.

Supported by the relatively high international crude oil prices and import costs, China’s n-butane prices went up from March. Up to July 31, the average dealing price of n-butane increased by RMB 1,120/mt or 31% from the low price in 2018. In 2018, China’s MA prices fluctuated frequently, and the average dealing price of MA in July increased by RMB 950/mt or 12.7% from the low price in March.

As seen in the chart, the profits of the MA units in Q3, 2018 greatly decreased year-on-year. According to SCI’s statistics, the average theoretical profit of MA units was RMB 1,623/mt, down RMB 2,025/mt or 55.5% Y-O-Y.

In March 2018, the MA prices were relatively low, and so did the operating rates of MA units. But the overall operating rate of MA units was higher than 80%, which grew to some extent from 2017.

In the tradition, China’s LPG prices go up in Q3, 2018. With the demand for n-butane increasing, the n-butane prices will hover at highs. Meanwhile, as the profits of MA units are fairish, most MA producers will pay more attention to the n-butane supply rather than the n-butane prices. Furthermore, MA producers will intend to raise the MA prices, thus the profits of MA units will remain moderate in the short term. Besides, sources say that many MA units will be put into operation, and the MA capacity will double accordingly. On the occasion, MA producers will cut the MA prices due to the limited downstream demand, so the profits of MA units will drop greatly. Therefore, SCI reckons that market participants will adopt a cautious attitude to the operation of newly added MA units.