SunSirs: Consumer Expectations not Fulfilled, China ABS Market Remains at a Low Level in Mid September

In mid September, the domestic ABS market was consolidating at a low level, and spot prices of various grades remained stable with small fluctuations. According to the Commodity Market Analysis System of SunSirs, as of September 19th, the average price of ABS sample products was 11,587.50 RMB/ton, an increase or decrease of -1.07% compared to the price level on September 1st.

Supply level: In mid September, the load level of the domestic ABS industry was average, and some of the early maintenance capacity resumed work. The industry's operating rate rebounded by about 3% to 65%. However, due to the slow digestion of the supply, overall inventory continues to accumulate in a pattern of stable supply with an upward trend. Recently, the inventory of ABS finished products has risen to over 185,000 tons. Overall, the current supply side has moderate support for ABS spot prices.

Cost factor: During this period, the overall trend of the three upstream materials of ABS showed mixed ups and downs, and the support effect on the cost side of ABS was average. The acrylonitrile market has fallen from a high level. This phase of high point market benefited from favorable supply conditions, but there was little substantial improvement in fundamentals. The lack of timely follow-up on demand and the transfer of goods from manufacturers to midstream merchants often result in a lack of digestion power for product inventory, leading to local resource surplus and causing the market to fall again.

Recently, the butadiene market has seen an increase. Before the holiday, major factories raised their ex factory prices twice, boosting the confidence of holders and leading to a general increase in on-site offers. In terms of demand, there has been a recent restart of facilities in East China, which has boosted the demand for raw material butadiene and significantly improved downstream purchasing enthusiasm. Currently, it is difficult to find low-priced sources of goods, and it is expected that the trend will be mainly stable, moderate, and strong in the short term.

The styrene market has been trading sideways at a low level this decade. Due to significant fluctuations in the crude oil market, the price of pure benzene has weakened, and the cost support of styrene has cooled down. The supply is relatively abundant, and the inventory of ports in East China remains low. Domestic demand is relatively stable, and the situation of new orders is average. There is a struggle between long and short positions in the market, and there is limited change in the supply and demand of styrene spot before and after the Mid Autumn Festival. It is expected that the market will continue to organize and operate in the future.

In terms of demand: September is already halfway through, and the main terminal demand for ABS has not yet shown the peak season level. Instead, it continues the off-season trend, and there is a strong wait-and-see sentiment. The high-temperature holiday for home appliance manufacturers has basically ended, but the overall load position of downstream factories is slowly recovering. The recovery of terminal demand is slow, and stocking operations are mainly based on weak demand to maintain production. Traders lack confidence, have a low willingness to build warehouses, and offer according to market conditions, resulting in a slower flow of goods. Overall, the demand side is not providing strong support to the market.

Future forecast

In mid September, domestic ABS prices remained weak and stable. Upstream three materials showed mixed ups and downs, providing average comprehensive support for ABS cost side. The load of ABS polymerization plant has slightly rebounded within ten days, and the inventory of finished products has slightly increased. The weak and rigid demand situation on the demand side continues, and market trading remains weak. The mismatch between supply and demand in the market is difficult to change, and due to the influence of multiple bearish factors, the traditional demand peak season expectation in September has not been fulfilled. The market has a bearish attitude towards the future, and it is expected that the ABS market will maintain a weak trend in the short term.

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