NAV

1. Market Overview: Upward Shift in Price Centers

Entering May, the domestic Acetic Acid market in China has demonstrated a corrective recovery following an earlier period of significant adjustment. As of May 7, the average market price has risen to approximately 3,065 RMB/ton, an increase of 132 RMB/ton (about 4.5%) from the late-April low of 2,933 RMB/ton.

This upward movement is primarily driven by scheduled maintenance at production facilities in North and Central China, which has tightened local supply. Coupled with resilient prices for raw materials, market sentiment has turned more optimistic. However, due to cautious downstream demand and existing inventory levels, the pace of price recovery remains measured.

2. Fundamentals: A Weak Balance Amid Dual Contraction

The Acetic Acid market is currently characterized by a pattern of "dual contraction" in both supply and demand, yet structural shifts are providing firm floor support for prices:

• Orderly Reduction in Supply: Due to routine industry maintenance, the estimated supply loss for this month is approximately 77,500 tons. As the circulation of spot goods tightens, the immediate pressure on market supply has eased.

• Divergent Downstream Demand: Operating rates in major downstream sectors remain lower than expected. The PTA and Acetic Anhydride sectors have seen notable production cuts, with a combined demand drop exceeding 30,000 tons. Although the Acetic Ester sector (such as Methyl and Ethyl Acetate) has seen some facility restarts, the resulting incremental demand is insufficient to fully offset the current sluggishness in overall downstream procurement.

• The Resulting Balance: Theoretically, the scale of supply reduction slightly outweighs the contraction in demand, establishing a defensive baseline for market pricing.

3. Inventory and Costs: Regional Destocking and Firm Bottom Support

From an internal support perspective, the market is currently navigating a mix of bullish and bearish factors:

1. Effective Regional Destocking: During the holiday period, facility shutdowns in North China and increased captive consumption by major producers in the Northwest led to significant regional destocking. However, total domestic Acetic Acid inventory remains at a relatively high level of approximately 188,000 tons, which continues to act as a ceiling for rapid price spikes.

2. Solid Cost-Push Support: Influenced by geopolitical factors and domestic maintenance schedules, Methanol (raw material) imports are expected to remain low, leading to tight spot availability. This provides strong cost-based support for Acetic Acid. Currently, the average theoretical production cost for Acetic Acid is estimated at 2,660 RMB/ton.

3. Narrowed Profitability: With the rise in raw material prices, industry profit margins have seen a significant month-on-month contraction. This compression of profit space has strengthened the resolve of production enterprises to maintain firm pricing.

4. HM Perspective: Outlook and Key Variables

Based on a multi-dimensional analysis, Wuxi High Mountain Hi-tech Development Co., Ltd. anticipates that the Acetic Acid market will enter a phase of narrow-range consolidation and rebalancing in the short term:

• Market Forecast: Supported by high cost-floor and supply reductions, the downside for prices is limited. Conversely, the recovery is tempered by soft demand and high inventory. We expect mainstream prices to fluctuate within the range of 2,930 to 3,400 RMB/ton in the near term.

• Critical Variables: We advise our partners to closely monitor Methanol price fluctuations, the pace of downstream replenishment, and the destocking progress of major producers.

In the ever-changing chemical trade environment, Wuxi High Mountain remains committed to deep industry engagement, upholding the principles of "Professionalism, Stability, and Transparency" to provide precise market insights and stable supply chain services to our global clientele.